AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 1053
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....nel (DRP) further erred in upholding / confirming an addition of Rs. 4,52.41.176/- to the Appellant's total income. 2. On the facts and in the circumstances of the case and in law, the learned AO/TPO erred and the Hon ble DRP further erred in upholding / confirming the action of the learned AO/TPO in in not stating any reasons to show that either of the conditions mentioned in clauses (a) to (d) of Section 92C(3) of the Act were satisfied before making an adjustment to the total income of the Appellant. Turnkey project function: 3. On the facts and in the circumstances of the case and in law, the learned AO/TPO erred and the Hon'ble DRP further erred in upholding / confirming the action of the learned AO/TPO in making an adjustment of Rs. 91,27.199/- to the total income of the Appellant in respect of the international transactions pertaining to turnkey project function. 4. On the facts and in the circumstances of the case and in law, the learned AO/TPO erred and the Hon'ble DRP further erred in upholding / confirming the action of the learned AO/TPO in rejecting segmental profit and loss account prepared by the Appellant and adopting ....
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....filed by the Appellant in support of such services, with a pre-determined mind set of making an adjustment to the income of the Appellant. 10. On the facts and in the circumstances of the case and in law, the learned AO/TPO erred and the Hon'ble DRP further erred in upholding/ confirming the action of the learned AO/TPO in making an adjustment without appreciating the facts of the case and without considering the detailed benchmarking analysis conducted and detailed submissions made by the Appellant before the learned AO/TPO Other grounds: 11. The learned AO erred in passing the impugned order under the Permanent Account Number of Siemens VAI Metals Technologies Pvt. Ltd. which has ceased to exist on the date of the impagned order on account of its merger with Siemens Limited with effect from 1 October 2011, thereby the entire assessment proceedings be regarded to be void ab initio as the same has been passed in the case of non-existent entity. 12. On the facts and in the circumstances of the case and in law, the learned AO erred in initiating penalty proceedings under section 271(1)(c) of the Act. The Appellant prays that the penalty proceed....
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....t order is barred by limitation. Since the validity of the draft assessment order is vital for finalising the assessment, therefore, we proceed to first deal with additional grounds No. 2 and 3. 5. The brief facts of the case pertaining to this issue are: For the year under consideration, Siemens VAI Metals Technologies Pvt. Ltd. filed its return of income on 29/11/2011, declaring a total income of Rs. 4,39,26,124. The return of income filed was processed under section 143(1) of the Act. Subsequently, the case was selected for scrutiny, and notice dated 08/08/2012, under section 143(2) was issued on Siemens VAI Metals Technologies Pvt. Ltd by the ITO, Kolkata. Pursuant to the order dated 17/08/2012, passed by the Hon'ble Bombay High Court, Siemens VAI Metals Technologies Pvt. Ltd, inter-alia, was amalgamated with Siemens Ltd. with effect from 01/10/2011. As a consequence, Siemens Ltd was the resultant amalgamated company, and Siemens VAI Metals Technologies Pvt. Ltd., i.e. the erstwhile company, ceased to exist subsequent to the approval of the scheme of amalgamation by the Hon'ble Bombay High Court. The assessee vide letter dated 18/10/2012, intimated the DCIT, Kolkata about th....
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.... AO passed the final assessment order under section 143(3) read with section 144C(13) of the Act in the name of Siemens Ltd (successor in interest to Siemens VAI Metals Technologies Pvt. Ltd.), assessing the total income at Rs. 5,30,53,320. 6. During the hearing, the learned Authorised Representative ('learned AR') submitted that despite due intimation by the assessee regarding the amalgamation, the draft assessment order was passed in the name of a non-existing entity and therefore the same cannot be said to be valid draft assessment order in existence. Thus, all the subsequent proceedings are bad in law and void ab initio. The learned AR also submitted that notice under section 143(2) was issued on the erstwhile company before amalgamation and no new notice pursuant to amalgamation was issued in the name of the existing amalgamated company. In support of his submission, the learned AR placed reliance upon various decisions. 7. On the contrary, the learned Departmental Representative ('learned DR') objected to the admission of additional grounds of appeal and submitted that this issue was not raised before the lower authorities. The learned DR by referring to the cover lette....
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....Maruti Suzuki India Ltd. [2019] 416 ITR 613 (SC) held that where the assessee company was amalgamated with another company and thereby lost its existence, assessment order passed subsequently in name of the said non-existing entity, is without jurisdiction and is liable to be set aside. The Hon'ble Supreme Court further held that participation in the assessment proceedings cannot operate as an estoppel against the law. Insofar as the decision of the Hon'ble Supreme Court in Mahagun Realtors Pvt. Ltd. (supra), on which reliance has been placed by the learned DR, we find that in the facts of that case no intimation regarding the fact of amalgamation was filed before the Revenue and the taxpayer in that case also suppressed the fact of amalgamation in the return filed under section 153A of the Act post amalgamation. The Hon'ble Supreme Court further notes that the conduct of the taxpayer, commencing from the date of the search took place, and before all forums, reflects that it consistently held itself out as the assessee. Thus, in its peculiar facts, the Hon'ble Supreme Court decided the issue against the assessee. In the present case, as noted above, immediately after the approval o....
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....ward a draft of the proposed order of assessment if he proposes to make a variation in the returned income or loss which is prejudicial to the interests of the assessee. Undoubtedly, the draft assessment order has legal connotations as it lays the foundation of any prospective reduction in the income of the assessee or creates a tax liability over and above the returned income. Thus, in that sense, it is not merely a procedural step in the assessment proceedings. Further, if we go a little deeper into the scheme of Sec. 144C of the Act and consider sub-section (3) of Sec. 144C of the Act, which reads as under:- "(3) The Assessing Officer shall complete the assessment on the basis of the draft order, if ......", It envisages that an assessment has to be completed on the basis of a draft assessment order, thereby making it apparent that the draft order is a core component of assessment. In fact, the assessee has an option to accept the draft order proposed by the Assessing Officer as per Sec. 144C(2) of the Act. In such a case, the Assessing Officer will proceed to pass the final assessment order under Section 143(3) r.w.s. 144C(13) of the Act without making any fur....
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....ssing Officer passes a final order under Section 143(3) of the Act in case of an 'eligible assessee', and the relevant extract of the judgment reads as under :- "5. Therefore, in view of Section 144C(15) of the Act which defines eligible assessee to whom Section 144C(1) of the Act applies to inter alia mean any foreign company. Therefore, a draft assessment order under Section 144C(1) of the Act is mandated before the Assessing Officer passes a final order under Section 143(3) of the Act in case of eligible assessee. An draft assessment order passed under Section 144C(1) of the Act bestows certain rights upon an eligible assessee such as to approach the DRP with its objections to such a draft assessment order. This is for the reason that an eligible assessee's grievance can be addressed before a final assessment order is passed and appellate proceedings invoked by it. However, these special rights made available to eligible assessee under Section 144C of the Act are rendered futile, if directly a final order under Section 143(3) of the Act is passed without being preceded by draft assessment order. 6. In the above view, the assessment order dated 23rd ....
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....der is passed. In case, an assessee does not object to the draft assessment order, then a final assessment order is passed in terms of the draft assessment order by the Assessing Officer. It is only on passing of the final assessment order that the assessee, if aggrieved by it, would be able to approach the appellate authorities under the Act. These special rights are made available under Section 144C of the Act to an eligible assessee such as the petitioner. Therefore, it cannot be ignored by passing an final order under Section 144(13) of the Act without preceding it with a Draft Assessment order as required therein. 10. Moreover, so far as a Foreign Company is concerned, the Parliament has provided a special procedure for its assessment and appeal in cases where the Assessing Officer does not accept the returned income. In this case, in the working out of the order dated 5th May, 2017 of the Tribunal results in the returned income being varied, then the procedure of passing a draft assessment order under Section 144C(1) of the Act is mandatory and has to be complied with, which has not been done." (underlined for emphasis by us) 24. A perusal of the af....