TaxTMI 
TaxTMI 
2016 (1) TMI 892
X X X X Extracts X X X X
X X X X Extracts X X X X
....11, the assessee filed its return of income on 4.10.2010 declaring income of Rs. 61,30,89,140. The return of income was processed under Section 143(1) of the Act and the case was subsequently taken up for scrutiny. In the course of assessment proceedings, the Assessing Officer; on noting that the assessee had reported international transactions in Form No.3CEB made a reference under Section 92CA of the Act to the Transfer Pricing Officer ('TPO') for determining the Arm's Length Price ('ALP') of the said international transactions. The TPO after examining the assessee's T.P. documentation rejected the same for all three segments, namely (i) Contract manufacturing, (ii) Software development services and (iii) Engineering Support Services and ITES. The TPO then undertook his own T.P. Study and after obtaining the assessee's submissions in the matter passed an order under Section 92CA of the Act dt.30.1.2014 wherein the T.P. Adjustments proposed were as under :- S.No. Particulars Amount Rs. 1. Software development services 4,40,47,940 2. IT Enabled Services 13,81,98,347 3. Contract Manufacturing 64,90,07,221 Total Adjustments u/s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the law, facts, circumstances, natural justice, equity and all other known principles of law. 6. That the findings, reasons, conclusions and directions of Dispute Resolution Panel (DRP) u/s 144C are a bundle of contradictions and clearly unsustainable in law requires to be rejected. Consequently the addition based on such directions requires to be deleted. 7. The DRP erred in not considering the relevant materials, evidences and data and the directions issued are without application of mind. 8. That the order of the DRP and the directions given therein are bad in law and not as per law requires to be cancelled. 9. That the AO/TPO/DRP erred in not providing adequate and sufficient opportunity as required under law thus violating the principle of natural justice, hence on this ground alone the orders requires to be annulled. 10. The appellant denies the tax liability on the surplus arising on the computation of arms length price for the impugned assessment year. 11. The Learned Assessing Officer erred in bringing to tax u/s 92CA as outlined below in the table as per the communication/order of the Transfer Pricing Officer and the d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to has been identified nor the enterprise which has entered into such a transaction has been identified. Unless these two are identified as explained in Rule 10B(2) no further proceedings are possible. In this case, in view of non-identification, the entire order requires to be vacated. 24. The authorities below erred in ignoring the method followed by the appellant. The authorities below ought to have adduced cogent reasons for rejecting the method followed by the appellant before substituting and prescribing a new method. 25. The onus is on the department to establish there is any tax avoidance and it is essential that incontrovertible evidences are in the possession of the AO before a reference is made as held by the Supreme Court in 131 ITR 597 and further has erred in not relying on the circular. 26. The Learned AO/TPO/DRP have failed to identify comparables in terms of Rule 10B(3). 27. The Learned AO/TPO/DRP failed to make the necessary adjustments as is required in terms of Rule 10B(2). 28. The AO/TPO/DRP erred in not granting the variances deduction of 5% envisaged in the Act and Circular. 29. No opportunity was given to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate of the provisions of section 144C of the IT Act. 5. Whether the Hon'ble DRP, was right in super imposing the decision of other benches of ITAT in the case of assessee to reject these comparables when selectionof comparables in a case depends in transfer pricing onas. Specific FAR analysis. 6. Whether the Hon'ble DRP instead of relying on decision of other benches of ITAT, ought to have decided the comparability of these companies on the basis of specific facts brought on record by the TPO in the case of the assessee. 7. The DRP erred in directing the Assessing Officer to follow the ratio of the Hon'ble Court in the case of Tata Elxsi Ltd 349 ITR 98 and exclude Rs. 57,93,554 being the expenses incurred in foreign exchange on travel and Rs. 1,085,000 insurance expenses respectively form the total turnover also while computing the deduction under Section 10A of the IT Act as the decision of the High Court is binding, without appreciating the fact that there is no provision in section 10A that such expenses should be reduced from the total turnover also, as clause (iv) of the explanation to section 10A provides that such expenses are tobe redu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pending, the same shall not abate, be discontinued or in any way be prejudicially affected by reason of the transfer of the undertaking of the transferor Companies or anything contained in this Scheme; but the proceedings may be continued, prosecuted and enforced by or against the Transferee Company in the same manner and to the same extent as it would be or might have been continued, prosecuted and enforced by or against the Transferor Companies, if this Scheme had not been made." In the above context, the learned Authorised Representative contended that, any proceedings may be continued, prosecuted and enforced by or against the transferee company in the same manner and to the same extent as it would be or might have been contained, prosecuted and enforced by or against the transferor company. 4.1.3 The learned Authorised Representative submitted that the facts in the case on hand were that, 'GE' filed the return of income for Assessment Year 2010-11 on 4.10.2010, after which the case was taken up for scrutiny by issue of notice under Section 143(2) of the Act dt.29.8.2011 which was duly served on the assessee. Subsequently, the Assessing Officer made a reference to the TPO....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'ble Karnataka High Court. The Hon'ble High Court by its order dt.28.5.2004 sanctioned the above scheme. The Court directed the transferee company within 30 days of the Court's order should file a certified copy of the Court's Order with the Registrar of Companies, Karnataka. Since the regd. Office of H.P. India was at Delhi a petition u/s.391 to 394 of the Companies Act was also filed before the Hon'ble Delhi High Court for sanction of the scheme. The Hon'ble Delhi High Court by its order dt.12.2.2004 sanctioned the scheme of amalgamation. Thus consequent to the orders of the Hon'ble High Court and the scheme of amalgamation H.P. India stood dissolved with effect from the appointed date without the process of winding up. Thus w.e.f. 1.4.03 H.P. India ceased to exist as an entity. 6. HP India for A.Y. 2002-03 filed its return of income on 30.10.2001. In the course of assessment proceedings vide letter dt.26.7.04 it informed the Assessing Officer that pursuant to the amalgamationof HP India with HP Sales, HP India stood dissolved eventhenotice u/s.143(2) had been issued on 23.10.2003. HP India pointed out that no assessment can be made on a company which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t in the eye of the law." 28..... 29..... 30.... 31..... 32..... 33. The Supreme Court in the case of Marshall Sons & Co (India) Ltd has observed that amalgamation takes palace from the date mentioned in the scheme of amalgamation as sanctioned by the Court and not on the date of sanction of amalgamation or the date the amalgamating company was struck off the register of companies and assessment has to be made accordingly. 34 After taking into consideration the above decision, we find that the ratio of these decisions is squarely applicable on the facts of the prescn l case. In the present case, the assessee company was amalgamated w.c.f 1.4.2000 and the assessments were completed on 26.3.2002 which was after the date of amalgamation of the assessee into MIL, therefore, the assessments completed on non existence entity, in our considered view voi ab-initio. Accordingly we hold that the assessments for these years were invalid, therefore, they are quashed." 4.1.5 The learned Authorised Representative submits that the above orders, placed reliance upon, have been passed after considering and following the decisions of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....001, the assessee-company can be said to have admitted that it continued to be in existence so that the assessment made upon it may be held to be valid. This raises the question whether the assessee can consent to the AO making an assessment upon it, though there is no provision in the IT Act to do so. In Asit Kumar Ghose vs. Commr. of Agrl. IT (1952) 22 ITR 177 (Cal), the Calcutta High Court held that should an assessee file return or intervene in an assessment proceeding pending against an executor of an estate under the impression that he is liable to be charged as beneficiary of the estate, it is open to him, if he is not really liable at law, to appeal in proper time against the order of assessment against him and point out the invalidity of the assessment though he might have, by his conduct, acquiesced in the assessment proceedings. There can be no estoppel against statute. An assessment is to be governed by the provisions of the Act and not on the view which the parties may take as to their rights and labilities. In CIT vs. Bharat General Reinsurance Co. Ltd. (1971) 81 ITR 303 (Del), the Hon'ble Delhi High Court held, where the assessee itself included the dividend in his r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and incapable of passing by manual delivery, shall, under the provisions of Sections 391 and 394 of the Act, without any further act or deed, be transferred to and be vested in the Transferee Company so as to vest in the Transferee Company all the right, title and interest of the Transferor Companies therein. (b) All the moveable assets including cash in hand, units of mutual funds, market instruments and other securities, if any, of the Transferor Companies, capable of passing through manual delivery or endorsement and delivery shall be so delivered or endorsed and delivered, as the case may be, to the Transferee Company to the end and intent that the property therein passes to the Transferee Company, on such delivery or endorsement and delivery, pursuant to the provisions of Section 394(2) of the Act without requiring any deed or instrument of conveyance for transfer of the same, subject to the provisions of the Scheme. Such delivery and transfer shall be made on a date mutually agreed upon between the respective Board of Directors of the Transferor Companies and the Board of Directors of the Transferee Company, within 30 (thirty) days from the Effective Date. (....