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2020 (12) TMI 1072
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....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 ground of appeal, the draft assessment order passed by the Ld. AO (and consequential assessment proceedings) are void ab-initio for the reason that Ld. AO grossly erred in passing a draft assessment order instead of a final assessment order when the transfer pricing order was itself a nullity in the eyes of law for having being passed in the name of non-existent "Cairn India Ltd.". 2 Without prejudice to the above grounds of appeal, on the facts, in the circumstances of the case and in law, the Ld. AO erred in assessing the total income and adjusted book profit of the Appellant at Rs. 374,09,75,540 and Rs. 2942,51,39,964 re....
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....ct 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 191,13,00,000/- both under the normal provisions of the Act as well as under section 115JB of the Act, while accepting change in the method of depreciation on plant and machinery from Straight Line Method ("SLM") to Unit of Production ("UOP") Method, in as much as the additional depreciation debited to the profit & loss account, for the period upto 31st March, 2014 as a consequence of adopting the changed method, has been allowed. 6.1 That on the facts and circumstances of the case & in law, the Ld. AO/DRP failed to appreciate that the depreciation amounting to INR 191,13,00,000/- was already disallowed in the computation of income unde....
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....ot 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 Resource Agreement / Joint Operating Agreement, partners of Unincorporated Joint Venture (UJV) are permissible to pay only for actual cost incurred by the Appellant without any mark-up. 10.2 That on the facts and circumstances of the case & in law, the Ld. AO/TPO/DRP erred in not appreciating that the transaction of reimbursement of expenses amounting to INR 62,62,135/- entered into by the Appellant with its Associated Enterprises ('AEs') is in the nature of pass through costs and hence notional mark up of 5% on the same is unwarranted. 10.3 That on the facts and circumstances of the case & in law, the L....
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....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 transactions and specified domestic transactions as mentioned in Form 3CEB with its Associated Enterprises (AEs) as under :- International Transaction S. No. Natureof Transaction Amount in (Rs.) Method Applied 1 Bank Guarantee 805346 CUP 2 Subscription of Equity Shares 12102900 Other Method 3 Recovery of travel & accommodation expenses 6262135 4 Parent company overheads 415346005 5 Share of manpower general and administrative cost 3975481665 6 Indirect charges 3705186 7 Sale of inventory and consumables 5089707 ....
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....en passed in the name of non-existent entity vitiating the whole assessment proceeding. 7. So, firstly, we would deal with ground no.1 raised in the appeal so as to decide issue as to whether assessment order passed by the AO on non-existent entity i.e. Cairn India Limited is void ab initio vitiating the entire assessment proceedings. 8. Ld. AR for the taxpayer challenging the impugned transfer pricing order passed on a non-existent entity and the validity of draft assessment order contended inter alia that the factum of amalgamation of Cairn India Ltd. with Vedanta Ltd. was duly intimated to the AO; that the order passed by the TPO in the name of amalgamating company is nullity/non-est ; that final assessment order passed by the AO is also barred by limitation having been passed on 28.11.2019 and relied upon the decision of Hon'ble Supreme Court in cases of PCIT vs. Maruti Suzuki India Ltd. 416 ITR 613 & Spice Infotainment Ltd. vs. CIT in Civil Appeal No.285 of 2014 and the decision of the Tribunal in FedEx Express Transportation and Supply Chain Services (India) Pvt. Ltd. vs. DCIT in ITA No.857 of 2016. Ld. AR for the taxpayer further relied upon the decision rendered by th....
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....e Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any non-resident not being a company, or any foreign company." 12. When we adhere to the provisions contained u/s144C(15)(b)ii of the Act "eligible assessee" needs to be an entity namely M/s. VEDANTA LIMITED , whereas transfer pricing order has been passed in the name of erstwhile M/s. Cairn India Limited which was not in-existence as on the date of order i.e 29th October, 2018, because M/s. Cairn India Ltd. got amalgamated with M/s. Vedanta Ltd. with effect from 11th April, 2016. Similarly draft assessment order dated 28th December, 2018 has been passed in the name of M/s. Vedanta Ltd. formerly known as Cairn India Ltd. which can not be considered as an "eligible assessee" u/s 144C(15)(b) (ii). 13. Identical issue has been decided by the Hon'ble Delhi High Court in case of Spice Entertainment Ltd. bearing ITA No. 475 and 476 of 2011 with date of orders as 3rd August, 2011, which has been affirmed by the Hon'ble Supreme Court in Civil Appeal No. 285 of 2014 (SC) date of order 2nd November, 2017. Hon'ble Delhi High Court in case of Spice Entertainment Ltd. thrashed the issue at length by....
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....assessee to reassess the income, all the consequent proceedings were null and void and it was not a case of irregularity. Therefore, Section 292B of the Act had no application. 16. When we apply the ratio of aforesaid cases to the facts of this case, the irresistible conclusion would be provisions of Section 292B of the Act are not applicable in such a case. The framing of assessment against a non-existing entity/person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a "dead person‟. 17. The order of the Tribunal is, therefore, clearly unsustainable. We, thus, decide the questions of law in favour of the assessee and against the Revenue and allow these appeals." 15. Hon'ble Supreme Court also decided identical issue in case of Pr. Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Ltd. Civil Appeal No. 5409 of 2019 as to framing the assessment in the name of erstwhile entity / amalgamating company in the light of provisions contained u/s 292(b) of the Act. Hon'ble Supreme Court has also distinguished the decision rendered by Hon'ble Delhi Hig....