TMI Blog2022 (11) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, it could not be said that any income, on account of ALP adjustment, had escaped assessment. As also bearing in mind the entirety of the case, we hold that the reasons for reopening the assessment were unsustainable in law. The impugned reassessment proceedings must stand quashed for this short reason alone. As we have quashed the reassessment proceedings for this short reason, we see no need to deal with other issues raised in the appeal, or in the cross-objections, or on merits. - ITA Nos. 125 and 126/Mum/2021 And CO Nos 141 and 142/ Mum 2021 Arising out of ITA Nos. 125 and 126/Mum/2021 - - - Dated:- 31-10-2022 - Pramod Kumar (Vice President) And Sandeep S Karhail(Judicial Member) For the Appellant : Vatsalaa Jha and Chetam MKacha For the Respondent : Madhur Agarwal along withNimesh Vora and Moksha Mehta ORDER PER PRAMOD KUMAR, VP :- 1. These two sets of appeals and cross-objections pertain to the same assessee, involve some common and interconnected issues, and were heard together. As a matter of convenience, therefore, both the appeals as also both the cross-objections are being disposed of by this consolidated order. 2. As these are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td become Associates Enterprises, within the ambit of section 92A(2)(j). 4. It was in this backdrop that the assessment was reopened, and the assessment was finally made, after an ALP adjustment in respect of the corporate guarantee extended by the assessee to ICICI Bank Singapore in respect of Biomatrix. Aggrieved, assessee carried the matter in appeal before the CIT(A), and even though the assessee succeeded on other grounds, there was no adjudication on the correctness of the reasons for reopening the assessment- an aspect, given the relief given to the assessee anyway, was implicitly treated as infructuous. The assessee is not satisfied and is in cross-objection before us. 5. When the matter came up for hearing before us, and we noticed the above-extracted reasons for holding that the assessee and Biomatrix, we put it to the learned Departmental Representative as to how, in the absence of any shareholdings in a company, how can a person be treated as controlling an asessee just because he is a director in the said company, learned Departmental Representative pointed out that in the annual report of the assessee company, late Sandeep Tandon was described as key manageri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed in Section 92A(2)(b), or on a tangible basis of control, rather than a simple statement of being a key managerial person or being a director. We were thus urged to hold that the reasons recorded by the Assessing Officer were inadequate and insufficient to come to the conclusion that the income had escaped the assessment, and, therefore, the very assumption of jurisdiction is invalid in law for this reason as well. Learned counsel also addressed the scope of what constitutes an associated enterprise under section 92A, and made an effort to demonstrate how the Assessing Officer has failed to make out a case for the assessee and Biomatrix being associated enterprises. Learned Departmental Representative once again submitted that the expression control is not defined under Section 92A(2)(j) and directorship in a company and being its key managerial person clearly shows that prima facie that person has controlled the company. She also relied upon the stand of the Assessing Officer. We were thus urged to confirm the stand of the Assessing Officer on this point, and decline to interfere in the matter. 6. We have heard the rival contentions, perused the material on record, and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Biomatrix- of which 91% equity was held by Sandeep Tandon, was that The books of the assessee company reveal that one Sandeep Tandon (Since deceased), who was a Director in the assessee company, was 91% shareholder in M/s. Biomatrix at the time of this deal. As per para 10 of the Notes and Accounts of the Audit Report of the financial year 2008-09 of the assessee, Mr. Sandeep Tandon has been shown as the Key Managerial Person . In the instance case, as is evident Sandeep Tandon was a person controlling the affairs of both the assessee company ... Thus assessee company and M/s. Biomatrix Ltd become Associates Enterprises, within the ambit of section 92A(2)(j) . The question then arises whether just because someone is described as a key managerial person in the annual accounts and is a director of the company, can it be said that that said, enterprise is controlled by an individual as is the necessary precondition for invoking Section 92A(2)(j). The answer is emphatically in negative. It is not even the case of the Assessing Officer, and that is the actual position, that Sandeep Tandon had any shareholdings in the assessee company, and it is an admitted position that he w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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