TMI Blog2020 (12) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... LDIP SINGH, JUDICIAL MEMBER Appellant, M/s. Vedanta Limited (hereinafter referred to as the taxpayer ) by filing the present appeal sought to set aside the impugned order dated 28/11/2019 passed by the Assessing Officer (AO) in consonance with the orders passed by the ld. DRP/TPO under section 143 (3) read with section 144C of the Income-tax Act, 1961 (for short the Act ) qua the assessment year 2015-16 on the grounds inter alia that :- 1. That on the facts and circumstances of the case in law, the draft assessment order (and the consequential final assessment order) passed by Asstt Commissioner of Income Tax, Circle 26(2), New Delhi ( Ld AO ) is void ab initio for the reason that the draft order itself has been passed in the name of a non-existent entity and accordingly vitiates the whole assessment proceedings. 1.1 That on the facts and circumstances of the case in law, the transfer pricing order passed by Learned. Transfer Pricing Officer ( Ld. TPO ) in the name of non-existent Cairn India Ltd. is void ab-initio thereby rendering consequent proceedings under section 143(3) read with 144C of the Act as invalid. 1.2 Without prejudice to the above g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case in law, the Ld. AO/DRP erred in adding back the disallowance of ₹ 6,77,00,000 under section 14A of the Act read with Rule 8D of the Rules in computing book profit under section 115JB of the Act. 4.1 That while adding back the disallowance u/s 14A for MAT computation, the Ld. AO/DRP conveniently failed to take cognizance of the order passed by the Hon ble 1TAT in the Appellant s own case for AY 2011-12 to AY 2013-14. 5 That on the facts and circumstances of the case in law, the Ld. AO/DRP erred in allowing additional depreciation amounting to 1NR 1,84,30,287/- under section 32( 1) (iia) of the Act despite the fact that Appellant had not claimed the same in its return of income. 5.1 That on the facts and circumstances of the case in law, the Ld. AO/DRP erred in observing that the claim of additional depreciation was to be mandatorily allowed in terms of Explanation 5 to section 32(1) of the Act, without appreciating that additional depreciation being optional in nature, is not covered within the purview of the said Explanation. 6 That on the facts and circumstances of the case in law, the Ld. AO/DRP grossly erred in adding INR 191, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case in law, the Ld. AO/DRP erred in adding lease equalization reserve expenses of INR 4,65,61,425/- to book profits under section 115JB of the Act, which were debited to profit loss account in terms of Accounting Standard ( AS ) 19-Leases. 9.1 That the Ld. AO/DRP grossly erred in stating that AS 19 does not apply to lease of building more so when for the purpose of section 115JB of the Act they do not have the power of recasting the accounts of the Appellant certified by its statutory auditors. 10. That on the facts and circumstances of the case in law, the Ld. AO/TPO/DRP erred in not appreciating that the transactions of reimbursement of expenses of INR 62,62,135/-, Manpower, general and administrative ( MGA ) cost of INR 397,54,81,625/- and Parent Company Overheads ( PCO ) cost of INR 46,29,715/- totaling to INR 398,63,73,475/- are not in the nature of international transaction under section 92B(1) of the Act and hence outside purview of transfer pricing provisions. 10.1 That on the facts and circumstances of the case in law, the Ld. AO/TPO/DRP erred in not appreciating that as prescribed in Production Sharing Contract/Petroleum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to CUP in the form of actual cost of the said bank guarantee to the Appellant and also a quotation from an external commercial bank. 11.1 That the Ld. AO/TPO/DRP also erred in disregarding the detailed and proper comparability analysis submitted by the Appellant in gross violation of section 92(c)(3) of the Act. 12. That on the facts and circumstances of the case in law, the Ld. AO erred in imposition of interest under section 234C of the Income-tax Act, 1961. 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : M/s. Vedanta Limited, the taxpayer is into the business of exploring drilling, developing, producing refining, marketing of minerals and oil bye-products and other activities incidental to the above. Apart from its business activities, the taxpayer also holds interests in its subsidiary companies which have been granted right to explore and develop oil exploration blocks in the Indian sub-continent. The main source of revenue is sale of crude oil and natural gas from the blocks at Rajasthan and Canbay Offshore and Ravva Block (KG Basin). During the year under assessment, the taxpayer entered into international tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Cost Recovery 3986373475 4185692148 19,93,18,674 2. Corporate guarantee 8,05,346 66,68,263 58,62,917/- Total Adjustment 20,51,81,591/- 4. AO in compliance to the proposed adjustment made by the TPO/DRP made addition of ₹ 191,13,18,674/- on account of transfer pricing adjustment qua international transactions entered into by the taxpayer with its AEs, made addition of ₹ 1,84,30,287/- on account of additional depreciation claimed by the taxpayer, made addition of ₹ 191,13,00,000/- by way of disallowance for depreciation on account of change in accounting policies, made adjustment in the books profit of the taxpayer to the tune of ₹ 77693904/- made adjustment of ₹ 68,46,45,714/- on account of payment of CSR adjusted in the book profit of the company for calculation of MAT and made adjustment of ₹ 6,77,00,000/- by way of disallowance u/s 14A of the Act by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td.) with PAN of amalgamated entity only which is a mere irregularity and does not go to the roots of the case; that the TPO rectified the name of the amalgamating company u/s 154 of the Act vide order dated12.12.2018 well before passing the draft assessment order rectifying the mistake of mentioning the name of amalgamating entity being a mistake apparent on record and relied upon the decision rendered by Hon ble Apex Court in case of Sky Light Hospitality LLP vs. ACIT (2018) 92 taxmann.com 93 (SC). 10. Undisputedly, erstwhile entity M/s. Cairn India Ltd. stood amalgamated with the Vedanta Ltd. with appointed date 1st April, 2016 and effective date 11.04.2017, which fact has been duly brought to the notice of the AO. It is also not in dispute that in the assessee s own case in similar set of facts and circumstances of the case for AY 2014-15 assessment order in the name of non-existent entity has been held to be void and non-est. 11. When we examine the issue in controversy in the light of Provisions contained u/s 144C(15)(b) of the Act, the taxpayer in whose name Transfer Pricing Proceedings has been concluded and draft assessment order has been passed is not an eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al defect ? (ii) whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that in view of the provisions of section 292B of the Act, the assessment, having in substance and effect, been framed on the amalgamated company which could not be regarded as null and void? 14. Operating part of the findings returned by the Hon ble High Court is as under :- 12. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. Section 292B of the Act reads as under:- 292B. No return of income assessment, notice, summons or other proceedings furnished or made or issue or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reasons of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceedings is in substance and effect in conformity with or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in Spice Entertainment Ltd. assessment framed in the name of non-existent entity was found to be void ab initio and as such not a curable defect u/s 292(b). 16. The Ld. DR for the revenue contended that mistake/ defect in passing the TPO order in the name of amalgamating entity namely M/s. Cairn India Ltd . was rectified by the TPO by inserting the name of amalgamated company namely Vedanta Ltd. u/s 154 of the Act vide order dated 12.12.2018 before passing of the draft assessment order and as such assessment framed in this case u/s 143(3) / 144C is a valid assessment. 17. We are of the considered view that as discussed in the preceding paras and has also been held by Hon ble Delhi High Court in case of Spice Entertainment (supra) and Hon ble Supreme Court in the case of Maruti Suzuki (supra) framing the transfer pricing order on the basis of which draft assessment order has been passed in the name of amalgamating entity is not a curable defect and the assessment framed is bad in law. So, the contention raised by the Ld. DR is not sustainable. 18. Identical issue has been decided by the Co-ordinate Bench of Tribunal in the assessee s own case for AY 2014-15 in ITA No.76 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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