TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 429
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....ised following grounds in its appeal: - "Grounds of Appeal 1. The Ld. CIT(A) erred in law and in facts and circumstances of the case confirming the disallowance u/s 14A made by the assessing officer. 1.1 The Ld. CIT(A) failed to appreciate that the Apex court in Maxopp Investments Ltd (402 ITR 640) has clearly held that only when expenditure has been actually incurred in earning tax free income, whether held as strategic investment or otherwise, any disallowance is called for but not when investments are held in business as stock in trade and no expenditure has been actually incurred, in which case no disallowance is warranted. 1.2 The Ld. CIT(A) erred in wrongly distinguishing the decision of Hon'ble Apex Court in appellants own case reported in 432 ITR 1, even when the facts were the same as interest free funds were far higher than the investment in securities earning tax free income. 2. The Ld. CIT(A) erred in not deciding on the other grounds relating to incorrect computation of refund, adjustment of refunds granted while computing interest u/s 244A and initiation of penalty proceedings u/s 271(1)(c). 3. At the time of hearing, with regard to Ground No. 1 which i....
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....an the investments made by the assessee. In such circumstances the presumption shall be that the investments were made only from out of interest free funds and not from borrowed funds. Respectfully following the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. HDFC Bank Ltd [366 ITR 505], we direct the Assessing Officer to delete the interest disallowance made under Rule 8D (2)(ii) of I.T. Rules. 10. With regard to Ground No. 2 which is in respect of incorrect computation of refund, adjustment of refunds granted while computing interest u/s. 244A of the Act, Ld. AR submitted that refund granted by the tax department has to be first adjusted against the interest and thereafter against the tax and the issue has been decided in favour of the assessee in the case of State Bank of India for the A.Y. 2008-09 by the Tribunal vide Order dated 19.06.2019. Ld. AR relied on the following decisions: - a. PCIT v/s. Solan District Truck Operators Transport Co-op. Society reported in [2020] 122 taxmann.com 121 (Himachal Pradesh High Court) b. Union of India v/s. ACIT reported in [2016] 72 taxmann.com 348 (Mumbai Tribunal); c. DCIT v/s. State Bank of Saurashtra (n....
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....32 ITR 1, based on which no disallowance u/s 14A was warranted since appellants interest free funds were far higher than the investment in securities earning tax free income. 2. Addition on account of cessation of liabilities u/s 41(1) 2.1 The Id. CIT(A) erred in law and in facts and circumstances of the case in confirming the addition made u/s 41(1) in respect of amounts which were debited to provision for depreciation on securities and were never claimed as deduction viz., securities written off and shifting loss. 2.2 The Id. CIT(A) erred in wrongly construing the write off of investments as write back of provision and accordingly holding that the same is taxable u/s 41(1)" 17. Assessee has further raised additional grounds in its appeal which are reproduced below: - "Additional Grounds of appeal Additional Ground No. 1: Order passed on a non-existent entity is bad in law 1. On the facts and in the circumstances of the case and in law, the appellant submits that the assessment order passed by the assessing officer is bad in law as it is passed on a non-existent entity, viz., the State Bank of Indore, which entity has ceased to exist as on the date of the assessment....
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.... the assessment order passed by the assessing officer is bad in law as it is passed on a nonexistent entity, viz., the State Bank of Indore, which entity has ceased to exist as on the date of the assessment order on account of its merger with the State Bank of India with effect from 25/08/2010 as a result of the Government of India Notification dated 28th July 2010, thereby rendering the entire assessment proceedings void ab intitio against the nonexistent entity." In this regard, the assessee has primarily relied upon the judgement of Hon'ble Supreme Court in the case of PCIT Vs. Maruti Suzuki India Ltd. reported in 416 ITR 613 (SC). 2. It is submitted although the assessee has vehemently contended that the AO has gravely erred in law by passing the assessment orders on a non-existent entity yet the record and the assessee's own conduct shows that even after merger of State Bank of Indore with State Bank of India, the assessee continued to conduct itself in the capacity of State Bank of Indore even though the same ceased to exist after 25.08.2010. In this regard, it is pertinent to mention the following undisputed and irrefutable facts: (a) It is seen from Form....
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....o as elaborated by the undersigned in Para 2(a) above. 3.3 It cannot be disputed that it is not the exact similarity of facts but the ratio decidendi of a judgment which is relevant particularly when the judgment is of the highest court of the land. 3.4 It may also be mentioned here that in the above judgment, Hon'ble Supreme Court has analysed the whole law relating to the amalgamation and as to what is precise effect of the amalgamation. In Para 18 of its judgment, Hon'ble Supreme Court has held as under : "Amalgamation, thus, is unlike the winding up of a corporate entity. In the case of amalgamation, the outer shell of the corporate entity is undoubtedly destroyed; it ceases to exist. Yet, in every other sense of the term, the corporate venture continues - enfolded within the new or the existing transferee entity. In other words, the business and the adventure lives on but within a new corporate residence, i.e., the transferee company. It is, therefore, essential to look beyond the mere concept of destruction of corporate entity which brings to an end or terminates any assessment proceedings....." 3.5 Finally, Hon'ble Supreme has held in Para 42 of its judgm....
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....serve that on similar circumstances in which "State Bank of Bikaner and Jaipur" merged with the "SBI", the Coordinate Bench following the decision of the PCIT v. Maruti Suzuki India Ltd., [2019] 416 ITR 613 (SC) in ITA.No. 2875/Mum/2019 for the A.Y. 2016-17 dated 25.04.2022 held that Assessment Order passed in the name of the erstwhile company is void ab-initio and quashed the same. While holding so the Coordinate Bench held as under: - "2. Assessee filed Additional grounds of appeal objecting passing of the assessment order on a non-existing entity, hence it is void ab initio under Rule 11 of I.T. Rules, 1963. Since the additional ground raised by the assessee is legal ground which goes to the root of the case, accordingly, this additional Ground No. (i) is admitted for adjudication. 3. At the time of hearing, it is brought to our notice that Assessing Officer has observed in its Assessment Order that the erstwhile State Bank of Bikaner and Jaipur was a public sector banking company, as per the order GSR 156(E) dated 22.02.2017 notified vide the Gazette of India No. 128 dated 22.02.2017 the erstwhile State Bank of Bikaner and Jaipur has been acquired by/amalgamated into M/s. S....
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.... against an entity which had ceased to exist was void ab initio. 6. Respectfully following the above said decision, we hold that the Assessment Order passed in the name of the erstwhile company is void ab initio. Accordingly, assessment order passed is quashed. The other grounds raised by the assessee are not adjudicated." 25. Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee's own case for the A.Y. 2016-17, we observe that Ld.DR has raised certain objections that (a) assessee has filed Form No. 35 in the erstwhile company name, we observe that the appeal cannot be filed before Learned Commissioner of Income Tax (Appeals) without following the Name/PAN mentioned in the Assessment Order . Therefore, this argument is misplaced. (b) With regard to other arguments on filing the return of income in erstwhile bank name and not surrendering the PAN, the return of income was filed at the time when the merger scheme was not approved by Hon'ble High Court. With regard to surrender of PAN this has relevance when the whole business is merged with the new company and what is relevant is not existe....