TaxTMI 
TaxTMI 
2020 (6) TMI 370
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....has erred in not appreciating that in the facts of present case both appellant and Intas Pharmaceuticals Limited (herein after referred "IPL") were paying AMT/MAT and therefore in absence of tax arbitrage, the provisions of specified domestic transactions would not apply to transaction of purchase of finished goods from the IP Firm. b) Assuming but not accepting and without prejudice to Ground No. 1 (a), in the facts and circumstances of the case and in law, the learned CIT(A) ought to have appreciated that IPL, which fulfils the conditions of selection of the tested party as laid down under Rule 10B of the Income Tax Rules and whose data regarding the comparable companies and the comparable uncontrolled transactions were more reliably available should be considered as a tested party c) That in the facts and circumstances of the case and in law, the learned CIT(A) erred in not appreciating the fact that the AO/TPO has failed to find out appropriate comparable for IP Firm and benchmarked the IP Firm with entities whose Functions, Assets and Risk ('FAR') Analysis and business profile was more akin to the appellant company and which were used by the appellant company ....
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....ubmissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. 5. In the facts and circumstances of the case and in law, the learned CIT(A) has erred in confirming action of the ld. AO in initiating penalty u/s. 271(1)(c) of the Act." 3. The assessee has raised the following additional ground of appeal vide letter dated NIL. "1. On the facts and in the circumstances of the case, the order passed by the Assessing Officer u/s.143(3) r.w.s. 92CA(4) of the I.T. Act dated 6.2.2017 is bad in law and ab initio void for the reason that the assessment order has been passed in the name of the erstwhile partnership firm M/s. Intas Pharmaceuticals where as on the date of the assessment the said partnership firm had already merged with Intas Pharmaceuticals Ltd. which is a company incorporated under the relevant provisions of the Companies Act. 2. Following from the preceding Ground No.1 the impugned assessment order dated 6.2.2017 deserves to be quashed and vacated. 3. On the facts and in the circumstances of the case, the order dated 25.3.2019 passed by the lear....
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....or the Assessment Year 2013-14 and ITA No. 678/Ahd/2019 for the Assessment Year 2014-15. Subsequent to the Filing of the aforesaid appeals the appellant has been advised that an important legal issue was left out inadvertently from the Grounds of Appeal originally raised before this Hon'ble Tribunal. This issue is a purely legal issue and, therefore, additional grounds of appeal are being now filed before this Hon'ble Tribunal with a prayer that the same may kindly be admitted and decided on merits. As per the additional grounds of appeal it has been submitted that the impugned assessment orders as well as the appellate orders have been passed in the name of the erstwhile partnership firm which no more existed on the relevant dates of passing of the relevant orders which means that the said orders have been passed in the names of non-existing entities. It is submitted that for this reason the orders are nullity in the eyes of law and, therefore, these orders deserve to be quashed being bad in law. 2. The relevant facts briefly stated are as under:- (i) Intas Pharmaceutical (herein after referred as "IP Firm"] was in existence in the form of a partnership f....
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.... appointed date was 1st April 2014. In view of above, the income of M/s Intas Lifesciences Private Limited was merged with the income of M/s Intas Pharmaceuticals Limited w.e.f. 1st April 2014. 3. It may be mentioned that the Hon'ble High Court of Gujarat disposed off the relevant Petition No. 267 of 2015 and the Application No.237 of 2015 with Company Petition No. 268 of 2015 and Application No. 238 of 2015 vide judgement dated 28th September, 2015 and the relevant observations of the Hon'ble High Court are reproduced below for ready reference from para-11 of the judgement:- "11. Considering the entire facts and circumstances of the case and on perusal of the Scheme and the proceedings, it appears that the requirements of the provisions of sections 391 to 394 of the Companies Act, 1956 are satisfied. The Scheme is genuine and bona fide and in the interest of the shareholders and creditors. I, therefore, accordingly allow the company Petitions and approve the Scheme. The Scheme is hereby sanctioned. Prayers made in the respective Company Petitions are hereby granted." 4. From the above, it may kindly be appreciated that from the date of the High C....
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..... 78.97 crores. (ii) Under the approved scheme of amalgamation, the transferee has assumed the liabilities of the transferor company, including tax liabilities. (iii) The consequence of the scheme of amalgamation approved under section 394 of the Companies Act, 1956 is that the amalgamating company ceased to exist. (iv) Upon the amalgamating company ceasing to exist, it cannot be regarded as a person under section 2(31) against whom assessment proceedings can be initiated or an order of assessment passed; (v) A notice under section 143 (2) was issued on 26-9-2013 to the amalgamating company, SPIL, which was followed by a notice to it under section 142(1); (vi) Prior to the date on which the jurisdictional notice under section 143 (2) was issued, the scheme of amalgamation had been approved on 29-1-2013 by the High Court of Delhi under the Companies Act, 1956 with effect from 1-4-2012; (vii) The Assessing Officer assumed jurisdiction to make an assessment in pursuance of the notice under section 143 (2). The notice was issued in the name of the amalgamating company in spite of the fact that on 2-4-2013, the amalgamated company MS....
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.... from those principles is neither expedient nor desirable. [Para 34] * For the above reasons, there is no merit in the appeal. The appeal is accordingly dismissed.[Para 35]. CASE REVIEW Pr. CIT(A) v. Maruti Suzuki India Ltd- [2019] 107 taxmann.com 472 (Delhi) (para 35) [affirmed; see annex]. Pr. CIT v. Maruti Suzuki India Ltd. [2017] 85 taxmann.com 330/250 Taxman 409/397 ITR 681 (Delhi) (para 34) and CIT v. Spice Enfortainment Civil Appeal No. 285 of 2014, dated 2-11-2017 (para 33) followed'." The aforesaid Hon'ble Supreme Court decision is fully applicable to the facts of the appellant's case. 5. It may be mentioned here that this issue was neither raised before the Assessing Officer nor before the learned CIT(A) and while filing the appeals before this Hon'ble Tribunal, this legal issue was inadvertently omitted from the grounds of appeal. It is submitted that a purely legal issue can be raised before the Hon'ble ITAT at any stage of the pendency of the appeal even if such issue was not raised before the lower authorities. It is reiterated that all the relevant facts were already available on record before ....
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.....e.f. 01-04-2014 by the order of the Hon'ble Gujarat High Court dated 28-09-2015 and subsequently intimated to the Department vide letter dated 30-10-2015. However, it is undisputed fact that at the time of issue of notice under section 143(2) of the Act, the firm i.e. Intas Pharmaceuticals was not amalgamated but the assessment order was framed after amalgamation in the name of Intas Pharmaceuticals which was not existing at the relevant point of time. We further note that the Department was aware about the amalgamation of the firm before framing the assessment order as the assessee intimated to the department as well as Hon'ble High Court also called the comments from the Department on the proposed scheme of amalgamation. Thus we can say that the provision of section 292B of the Act will not be applicable to the assessee as it is not a curable defect/mistake. In this regard we would like to take a note of the position of law laid down by the Hon'ble Supreme in the case PCIT Vs. Maruti Suzuki India Limited reported in 416 ITR 613. The facts in this case are that Suzuki Motors Corporation, and Maruti Suzuki India limited (in short MSIL) constituted a joint venture with....
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.... has assumed the liabilities of the transferor company, including tax liabilities; (iii) Thirdly, the consequence of the scheme of amalgamation approved under Section 394 of the Companies Act 1956 is that the amalgamating company ceased to exist. In Saraswati Industrial Syndicate Ltd., (supra) the principle has been formulated by this Court in the following observations: "5. Generally, where only one company is involved in change and the rights of the shareholders and creditors are varied, it amounts to reconstruction or reorganisation of scheme of arrangement. In amalgamation two or more companies are fused into one by merger or by taking over by another. Reconstruction or 'amalgamation' has no precise legal meaning. The amalgamation is a blending of two or more existing undertakings into one undertaking, the shareholders of each blending company become substantially the shareholders in the company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company. Strictly 'amalgamation' does not cover t....
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....ated company and proceeded to make an assessment in the name of a non-existent company which renders it void. This, in the view of the High Court, was not merely a procedural defect. Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law : "11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said 'dead person'. When notice under Section 143 (2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/s Spice which was non existing entity on that day. In such proceedings an assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law. 12. Once it is found that asse....
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....r the fact of amalgamation had been communicated to it. The Court noted that though the assessee had participated in the assessment, the original assessee was no longer in existence and the assessment officer did not the take the remedial measure of transposing the transferee as the company which had to be assessed. Instead, the original assessee was described as one in existence and the order mentioned the transferee's name below that of the original assessee. The Division Bench adverted to the judgment in Dimension Apparels (supra) wherein the High Court had discussed the ruling in Spice Entertainment (supra). It was held that this was a case where the assessment was contrary to law, having been completed against a nonexistent company." Hon'ble Supreme Court thereafter took note of the judgment in the case of Sky Light Hospitality Vs. ACIT, 259 taxman 390 (SC). This judgment was pressed in service by the Revenue to point out that if an order was framed in accordance with law in the name of amalgamating company, then it would amount to mistake, defect or omission which is curable under section 292B of the Income Tax Act. Hon'ble Supreme Court has dealt with....
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....td. The ITAT has also made reference to the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Intel Technology Ltd. P. Ltd., 380 ITR 272 (Kar.). The Tribunal has held that action under section 263 is a jurisdictional action against an assessee. In the case of a company, the ld. Commissioner was required to issue a show cause notice against a juridical person contemplated in section 2(31) of the Income Tax Act and if a juridical person ceases to exist then it would not be construed as a person within the meaning of section 2(31) against whom any action can be taken. The Commissioner would not assume proper jurisdiction and such type of defect would not be cured with help of section 292B of the Act, because it is not a procedural irregularity which could be cured. We also note that this Tribunal in the case of Snowhill Agencies Pvt. Ltd. Vs. Pr. CIT bearing ITA No. 1775/AHD/2019 vide order dated 21-1-2020 involving identical facts and circumstances has decided the issue in favour of the assessee. In view of above, we note that the assessment framed under section 143(3) r.w.s. 92CA of the Act is not sustainable. Hence the additional ground of appeal of the assessee i....