TaxTMI 
TaxTMI 
2018 (8) TMI 745
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....Resolution Panel ('DRP') is a vitiated order as the Ld. DRP has erred both on facts and in law, in not considering the submissions made by the Appellant and in confirming the addition made by the Ld. Assessing Officer ('AO')/ Ld. Transfer Pricing Officer ('TPO') to the Appellant's income. 2. That on the facts and circumstances of the case and in law, the Ld. AO [following the directions of Learned Dispute Resolution Panel ("Ld. DRP")] erred in assessing the returned loss of the appellant of Rs. 49,664,891 at the income of Rs. 65,58,117. 3. The Ld. Transfer Pricing officer (TPO)/ Ld.DRP erred on facts and circumstances of the case and in law by confirming an Transfer Pricing adjustment amounting to INR 56,223,008 holding that the international transaction pertaining to provision of contract research and development services ('R&D segment') do not satisfy the arm's length principle envisaged under the Act and in doing so have grossly erred in: 3.1 not appreciating that the Appellant had prepared the Transfer Pricing documentation bona fide and in good faith in compliance with the provisions of Section 92D of the Act read with Rule 10D ....
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....d in enhancing the income of the Appellant on account of interest on overdue receivables by Rs. 11,56,859 without stating any cogent reasons and basis for interest calculation. The Ld TPO grossly erred in charging interest to the receivables which were outstanding in ordinary course of business and has been collected in a reasonable period and in doing so grossly erred in law and in facts for the following reasons: 5.1 applying an arbitrary interest rate of 14.25 percent (lending rate of SBI plus 150 basis points) for calculating interest on outstanding receivables. 5.2 not considering the fact that the amount outstanding in the name of AEs represents the normal course of business activity and looking into the commercial expediency of the business, this situation prevails for both receipts and payments to/from the AEs. 6. That the Ld. AO has grossly erred in law in levying interest under section 234D of the Act and also withdrawing interest under section 244A of the Act. 7. On the facts and in the circumstances of the case and in law, the Ld. AO erred in initiating penalty proceedings under section 271(1)(c), 271AA and 271BA of the Act. That the above grounds of appe....
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....al also stands covered in favor of the Appellant by the jurisdictional High Court's decision in the case of Spice Entertainment Limited vs Commissioner of Service Tax (ITA 475, 476 of 2011) (Delhi), which has now been affirmed by the Hon'ble Supreme Court vide order dated November 2, 2017 in CA No. 285 of 2014. Reliance is also placed upon the following judicial precedents: * Akzo Nobel Chemicals (India) Ltd. (merged with Akzo Nobel India Limited) Vs. The Dy. Commissioner of Income Tax [ITA No.l225/PUN/2015] - Hon'ble Pune ITAT * CIT(C)-II Vs. Micra India Pvt. Ltd. [ITA 441, 444, 445, 446, 452, 461 of 2013] -Hon'ble Delhi High Court * DCIT Vs. Transcend MT Services Pvt. Ltd. [ITA No. 2697/Del/2014] - Hon'ble Delhi ITAT * Genpact Infrastructure (Bhopal) Pvt. Ltd., (now merged with Genpact India) Vs. DCIT [ITA No. 2025/Del/ 2014] Hon'ble Delhi ITAT * Shell India Markets Private Limited Vs. ACIT [ITA NO. 1055/BANG/2011] - Hon'ble Mumbai ITAT In light of the above settled legal position, the assessment completed on the erstwhile entity which had ceased to exist pursuant to the scheme of amalgamation, is a jurisdictional defect which is b....
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....e of erstwhile entity, i.e. Akzo obel Car Refinishes India Pvt. Ltd., without any mention of the transferee entity's name, i.e. Akzo Nobel India Limited. (refer pages 121 of appeal set) 4. Date of transferpricing order January 4, 2013 Passed in the name of erstwhile entity, i.e. Akzo Nobel Car efinishes India Pvt. Ltd., without any mention of the transferee entity's name, i.e. Akzo Nobel India Limited. (refer page 124 of the appeal set) 5. Date of DRP directions December 24, 2013 Passed in the name of erstwhile entity, i.e. Akzo Nobel Car Refinishes India Pvt. Ltd., without any mention of the transferee entity's name, i.e. Akzo Nobel India Limited. (refer page 11 of the appeal set) 6. Date of final assessment order January 31, 2014 Passed in the name of erstwhile entity, i.e. Akzo Nobel Car Refinishes India Pvt. Ltd., without any mention of the transferee entity's name, i.e. Akzo Nobel India Limited. (refer page 1 of appeal set) 9. The reliance was placed on the following case laws: Spice Entertainment Ltd. Vs Commissioner of Service Tax in ITA Nos. 475 & 476/2011 order dated03.08.2011 (Del. HC) CIT, New Delhi Vs M/s Spice Entertainment....
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....e, copy of which is placed at page nos. 2 to 37 of the assessee's compilation. 12. It is noticed that an identical issue having similar facts has been decided by this bench of the Tribunal wherein one of us (Accountant Member is the author) in ITA No. 2025/Del/2014 for the assessment year 2009-10 in the case of M/s Genpact Infrastructure (Bhopal) Pvt. Ltd. (now merged with Genpact India) Vs DCIT, Circle-12(1), New Delhi (supra) wherein the relevant findings have been given in paras 8 to 14 of the order dated 09.02.2018 which read as under: "8. We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is an admitted fact that the assessee M/s Genpact Infrastructure (Bhopal) Pvt. Ltd. amalgamated with M/s Genpact India in pursuant to the order dated 19.11.2010 w.e.f. 01.04.2010 of the Hon'ble Delhi High Court and this fact was brought to the notice of the AO (ACIT, Circle-1, Jaipur) vide letter dated 24.01.2011 which was received in the office of Additional Commissioner of Income Tax, Range-12, New Delhi on 03.02.2011. In the said letter it has been mentioned as under: "Genpact Infrastructure (Bhopal) Privat....
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....ns before the ld. DRP who issued the direction to the TPO/AO vide order dated 26.12.2013 and the TPO on the directions of the ld. DRP passed the order giving effect of the direction of the DRP-1 u/s 24(5) of the Act on 21.01.2014. All the aforesaid orders were passed in the name of erstwhile entity i.e. M/s Genpact Infrastructure (Bhopal) Pvt. Ltd. without any mentioning of the transferee name i.e. M/s Genpact India. Therefore, it is crystal clear from the aforesaid narrated facts that the entity M/s Genpact Infrastructure (Bhopal) Pvt. Ltd. which amalgamated with M/s Genpact India, was not in existence when the TPO/AO/DRP passed their respective orders. 10. On a similar issue, the ITAT Delhi Bench I-1, New Delhi having the same combination passed a detailed order authored by the AM in the case of M/s Maruti Suzuki India Ltd. vs. Dy. CIT reported in (2016) 72 taxmann.com. 164. and the relevant findings have been given as under: "10. We have considered the submissions of both the parties and carefully gone through the material le on the record. In the present case, it is an admitted fact that the amalgamating company M/s Powertrain India Ltd. amalgamated with M/s Maruti Suzuki....
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....ated 11th February, 2004. With this amalgamation made effective from 1st July, 2003, M/s Spice ceased to exist. That is the plain and le effect in law. The scheme of amalgamation itself provided for this consequence, inasmuch as simultaneous with the sanctioning of the scheme, M/s Spice was also stood dissolved by specific of this Court. With the dissolution of this company, its name was struck off from the rolls Companies maintained by the Registrar of Companies. A company incorporated under the Indian Companies Act is a juristic person. It takes its birth and gets life with the incorporation. It dies with the dissolution as per the provisions of the Companies Act. It is trite law that on amalgamation, the amalgamating company ceases to exist in the eyes of law. In view of the aforesaid clinching position in law, it is difficult to digest the circuitious route adopted by the Tribunal holding that the assessment was in fact in the name of amalgamated company and there was only a procedural defect. After the sanction of the scheme on 11th April, 2004, the Spice ceased to exit w.e.f 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authoriti....
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.... 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. Participation by the amalgamated company in assessment proceedings would not cure the defect because "there can be no estoppels against law." 15. In the present case also when the assessment was framed by the AO vide order dated 29.12.2015 in the name of M/s Suzuki Powertrain India Ltd., the said company had already amalgamated with M/s Maruti Suzuki India Ltd. and therefore, it was not inexistence. Moreover, it is clear from the provisions of Section 170(2) of the Act that in the case of amalgamation, the assessment must be made on the successor i.e. the amalgamated company and not on the predecessor i.e. amalgamating company. Therefore, in the present case, the assessment framed by the AO vide order dated 29.12.2015 on the amalgamating company i.e. M/s Suzuki Powertrain India Ltd. which was not inexistence on the date of passing the assessment order was not valid and as such the same is quashed. Since we have allowed ground No. 1 of the assessee and assessment order is quashed, therefore, no finding is given on the other i....