TaxTMI 
TaxTMI 
2022 (3) TMI 1501
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....section 143(3) read with section/s 144C(13) and 144B of the Income-tax Act, 1961 ("Act"), to the extent prejudicial to the Appellant, is bad in law and void abinitio. 2. That on the facts and in law, the DCIT ought to have appreciated that in terms of section 144B of the Act read with S.O. No. 1434(E) dated 31.03.2021 issued by the Central Board of Direct Taxes ("CBDT"), assessment order could only be passed by the relevant income-tax authority designated as an "Assessing Officer", while passing the order, failing which the assessment framed would be non-est and void in terms of section 144C(13) read with section 143(3) of the Act. 3. That without prejudice on the facts and in law, the DCIT erred in assuming jurisdiction as an Assessing Officer, without appreciating that if a statute requires a thing to be done in a particular manner, it should be done in that manner or not at all. A. Assessment framed on an entity no longer in existence 4. That without prejudice to the other grounds on merits, the DCIT ought to have considered that an assessment framed on "Honda Motor India Private Limited" being a non-existent entity is nullity in the eyes of l....
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....ating profitability of the Appellant for the year under consideration. Adjustment of INR 18,90,90,000 on import of components and spare parts from AE's. 13. That the TPO grossly erred in making an adjustment of INR 18,90,90,000 in respect of the import of components and spare parts being the difference between the gross profit margins between the AE and Non-AE segment. 14. That the Authorities below grossly erred in characterising the Appellant as a 'distributor' of "spare parts" and hence concluding that 'Resale Price Method' (RPM) was the preferred method for determining the arm's length price of the international transaction relating to purchase of spare parts from the AE's. 15. That the Authorities below grossly erred in law in not appreciating that the necessary requisites for applying the RPM as MAM were lacking in the present case and hence, only the residual method viz. the TNMM method on a combined transaction approach, was the correct approach for benchmarking the operating profits of the Appellant. 16. That the Authorities below grossly erred on facts and in law in not appreciating that while the Appellant was a 'routine distr....
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....t on account of payment of royalty from INR 27,29,48,460 (as determined by the TPO in respect of the AE segment) to INR 44,31,78,460 (to include the payment of royalty in respect of the Non-AE segment also). 23. That approach of the TPO/DRP to carve out the payment of royalty as a separate international transaction and benchmarking the same was wholly erroneous and without any basis. 24. That the TPO/DRP completely failed to appreciate that the combined transaction approach adopted by the Appellant for benchmarking its operating profitability was the correct approach and there was no justification for treating the payment of royalty as a separate international transaction. 25. That the TPO/DRP grossly erred on facts and in law in making an adjustment in respect of payment of Royalty by the Appellant under the Technical Know-how agreement dated 01.09.2010 between the Appellant and Honda Motors Japan for acquiring the technical know-how for manufacture of parts. 26. That the TPO/DRP grossly erred in dwelling into the realm of 'commercial expediency' for determination of the arm's length price for the payment of royalty against the mandate of chapte....
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.... of making a double disallowance under section 37 of the Act. 35. That the DCIT grossly erred in disallowing the royalty under section 37 of the Act amounting to INR 17,02,30,000/- paid by the Assessee to Honda Motor Japan ('HMJ') under the license agreement dated 01.09.2010. 36. That the DCIT grossly erred in fact and in law while coming to the conclusion that the Agreement between the Assessee and HMJ was only to facilitate transfer of profit to parent entity, which is a perverse finding given the high profitability of the Appellant, a finding not disturbed by the TPO. 37. That the DCIT has erred in initiating penalty proceedings under Section 271(1 )(c) of the Act. 38. That the DCIT has erred in levying interest of INR 16,49,35,582/- under section 234B of the Act on the Appellant. 39. That the DCIT has erred in levying interest of INR 15,00,833/- under section 234C of the Act on the Assessee. 3. At the time of hearing, Sh. Deepak Chopra, learned counsel appearing for the assessee, took up the preliminary legal issue raised in ground nos. 4 to 9, wherein, the assessee has challenged the validity of impugned assessment order. 4. D....
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....ft assessment order, the assessee did not raise any objection before learned DRP that the TPO has passed the order in the name of non-existing entity. He submitted, even, while complying with the directions of learned DRP, the TPO has passed his final order on 30.04.2021 mentioning the correct name of the assessee. He submitted, in the final assessment order also, the Assessing Officer has mentioned name of both the amalgamated company and the amalgamating company and has also mentioned the PAN of both the entities. However, he submitted, since, the final assessment order was made at National e Assessment Centre, a technical error has crept into the order while mentioning the name and PAN of the assessee. He submitted, the error in the initial order of TPO as well as the final assessment order are of the nature covered under section 292B of the Act and would not make the orders invalid. Proceeding further, he submitted, the decision rendered by the Hon'ble Supreme Court in case of PCIT Vs. Maruti Suzuki India Ltd. (supra) would not apply to the facts of the present appeal, as, the Hon'ble Supreme Court dealt with a matter , wherein at the time of assuming jurisdiction for initiatin....
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....uthorities were conscious of the amalgamation of 'Honda Motor India Pvt. Ltd.' with the present assessee, viz., 'Honda Cars India Ltd.' from the very initial stage of proceeding before the TPO would be evident from the following observations of the Assessing Officer in the draft assessment order passed under section 143(3) read with section 144C of the Act on 31.12.2019: ".......It is pertinent to mention here that consequent to scheme of amalgamation as approved by the Hon'ble National Company Law Tribunal (NCLT), Allahabad Bench, Allahabad vide its order dated 02.08.2018, in Company Petition No. 189/ALD/2018 and connected with Company Application No. 90/ALD/2O18 the company Honda Motor India Pvt. Ltd (PAN AABCH7526E) (Transferor company) got amalgamated with Honda Cars India Ltd (AAACH1765Q) (Transfree company) with Appointed date 01.04.2018. The Hon'ble National Company Law Tribunal (NCLT), Allahabad Bench, Allahabad directed as under: (i) "Consequent upon the approval and sanction of the Scheme, all the assets, properties, entitlements, rights, benefits and advantages, liabilities and obligations of the Transferor Company be transferred without further act or ....
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....nterest of erstwhile Honda Motor India Private Limited (PAN AABCH7526E) since amalgamated]......" 12. Keeping in perspective the factual aspect of the issue, we need to examine the legal position. In case of PCIT Vs. Maruti Suzuki India Ltd.(supra), in pursuance to a scheme of amalgamation approved in the court of law, 'M/s. Suzuki Powertrain India Ltd.' merged with 'M/s. Maruti Suzuki India Ltd.'. However, in the notice initiating assessment proceeding as well as final assessment order, the Assessing Officer mentioned the name of the assessee as under: "M/s. Suzuki Powertrain India Ltd." (amalgamated with 'M/s, Maruti Suzuki India Ltd.' 13. The issue arising for consideration before the Hon'ble Supreme Court was, whether the assessment order passed by mentioning the name of the assessee, as above, would be a valid order. While deciding the issue, the Hon'ble Supreme Court upheld the decision of the Tribunal and Hon'ble Delhi High Court holding that the assessment order having been passed in the name of a non-existent entity, is invalid. Further, the Hon'ble Court held that such a jurisdictional error cannot be considered to be a mere procedural irregularity....