TaxTMI 
TaxTMI 
2022 (11) TMI 429
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....MUM/2022 (A.Y. 2005-06) 2. Assessee has raised 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 proceeding....
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.... the details referred to by the Ld. Ld. AR. From the details furnished it is clear that the interest free funds are undoubtedly more than 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 Prade....
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....iture has been actually incurred, in which case no disallowance is warranted. 1.3 The ld. CIT(A) erred in wrongly distinguishing the decision of Hon'ble Apex Court in appellants own case reported in 432 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....
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....ing assessments made on a nonexistent entity Assessee's contention The additional ground of appeal No. 1 filed in all the three years is as under : Ground No. 1-A.YS. 2009-10, 2010-11 & 2011-12 "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 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 show....
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....Ltd. 3.2 It is submitted that although the facts in the case of Mahagun Realtors (P.) Ltd were more glaring yet a common feature in that case and in the case of the present assessee and which Hon'ble Supreme Court noted is that even though the assessee company ceased to exist, the appeals continued to be filed in its behalf as is the fact in the present case also 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 t....
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.... India Pvt. Ltd., v. DCIT in W.P. NO. 27779 of 2017 dated 31.12.2016 (ii). ACIT v. VAhanvati Consultants (P.) Ltd., in [2022] 138 taxmann.com 52 (SC) (iii). Oasys Green Tech (P.) Ltd., v. Income Tax Officer [2020] 115 taxmann.com 153 (Madras) (iv). Pr.CIT v. Mahagun Realtors (P.) Ltd., [2022] 443 ITR 194 (v). Maxopp Investment Ltd., v. CIT [2018] 402 ITR 640 (SC)] 24. Considered the rival submissions and material placed on record, we observe 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 ....
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....d been approved on January 29, 2013 by the High Court under the Companies Act, 1956 with effect from April 1, 2012. The Assessing Officer had 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 April 2, 2013, the amalgamated company M had addressed a communication to the Assessing Officer intimating the fact of amalgamation. On these facts, the initiation of assessment proceedings 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 befo....