TaxTMI 
TaxTMI 
2025 (5) TMI 321
X X X X Extracts X X X X
X X X X Extracts X X X X
....') is bad in law in as much as it has been passed beyond the period of limitation provided for under section 153 of the Act On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in the following respects 2. in upholding the validity of the final assessment order dated 12 May 2015 passed under section 143(3) read with section 144C(3) of the Act beyond the period of limitation viz. 31 March 2015 even after accepting the fact that there was no variation to the income that arose as a consequence of an order purportedly passed by the Transfer Pricing Officer in the case of the appellant. 3. in holding that the transfer pricing order dated 12 January 2015 was a combined order passed by the Transfer Pricing Officer for two separate legal entities having their own respective PAN (appellant- AACCE4671N and Legrand India Private Limited ('Legrand') - AAACM50090). 4. in holding that the provisions of Explanation 1(i) to section 153 of the Act are applicable in the instant case 5. in applying Explanation 1(i) to section 153 of the Act without appreciating the fact that the case of the appellant is neither....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd circuit breakers. It was incorporated on 11.08.2010 in the name of Era Electricals Pvt Ltd. (EEPL). It acquired the business of switch gear division of Indo Asian Fusegear Ltd. (IAFL) who was an unrelated third-party seller, through a slump sale on 22.07.2010 for which the effective date of business transfer was 09.09.2010. Name of the assessee after the said acquisition was changed to Indo Asian Electric Pvt. ltd. (IAEPL) on 14.04.2011. Later, assessee again changed its name on 21.03.2012 to Novateur Electrical and Digital Systems Pvt. Ltd. (hereinafter referred to as 'Novateur' or the 'assessee'). Assessee filed its return of income for Assessment Year 2011-12, i.e., the year under consideration, on 30.11.2011 under its first changed name i.e., IAEPL. Return so filed was accompanied with Form 3CEB for transfer pricing regulation compliance and Form 3CD for tax audit. Assessee declared a total loss of Rs.48,87,02,205/- in this original return of income filed u/s.139(1) of the Act. Subsequently, a revised return of income was filed u/s.139(5) on 03.09.2012 reporting a total loss at Rs.130,17,88,775/- wherein depreciation of Rs.81.30 Crores on goodwill amounting to Rs.325.21 Cror....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and (India) Ltd./Indo Asian Electric Pvt. Ltd.]". The PAN quoted in the header table is "AAACM5009Q". which is of Legrand. Assessing Officer mentioned in the same header table is "DCIT-6(3), Mumbai". In the first para of this order, it is stated that a reference u/s.92CA(1) in case of Novateur Electrical and Digital Systems Pvt. Ltd. i.e., the assessee was received from DCIT-6(3), Mumbai on 30.09.2013 who had made reference for determination of arm's length price (ALP) for all the transactions reported in Form 3CEB filed by the assessee. 4.4 It is to be noted that there was cadre re-structuring of the jurisdiction owing to which jurisdiction in the case of Novateur Electrical and Digital Systems Ltd. i.e., assessee in the present case was changed to ACIT-10(3)(1), Mumbai. Similar change was made in the jurisdiction of Legrand to DCIT-10(2)(1), Mumbai. Owing to such change in jurisdiction on account of cadre restructuring, subsequent proceedings were undertaken under the changed jurisdiction. 4.5. Pursuant to this order of ld. TPO passed in respect of reference made by the ld. Assessing Officer of Legrand, a draft assessment order was issued u/s. 143(3) r.w.s. 144C(1), dated 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order has been passed by making the addition towards to the said TP adjustment by ACIT-10(3)(1), Mumbai in the name of Novateur Electrical and Digital Systems Pvt. Ltd. (formerly known as Indo Asian Electric Pvt. Ltd.) with the PAN of Novateur. In this final order, the same verbiage of para 6.2 has been retained. 5. In the backdrop of above stated detailed factual matrix, the issue to be addressed by the Bench raised by the assessee in ground No.1 is on ascertaining the validity of final assessment order dated 12.05.2015 passed u/s.143(3) r.w.s. 144C(3) since it has been passed without a valid TP order as the TP order dated 12.01.2015 is a combined order by the ld. TPO for two separate legal entities having their respective PAN and that there was no variation in the income that arose as a consequence of an order purportedly passed by the ld. TPO in the case of Novateur, i.e. the assessee. The only TP adjustment of Rs.6,65,357/- is in respect of international transactions with its AEs undertaken prior to amalgamation of Legrand with the assessee. Thus, in absence of a valid TP order in respect of international transactions undertaken by the assessee with its AEs, no draft assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Owing to approval of amalgamation scheme by the Hon'ble High Court of Bombay in the subsequent year, i.e., Assessment Year 2012-13, effective from 01.04.2011, during the pendency of the impugned proceedings, ld. TPO passed a combined order for the two separate legal entities, by mentioning name of the assessee as Novateur Electrical and Digital Systems Pvt. Ltd. [formerly Legrand (India) Ltd./Indo Asian Electric Pvt. Ltd.] in the PAN of Legrand i.e., AAACM5009Q. By the said order, ld. TPO attempted to cover up the situation which arose because of amalgamation of Legrand into Novateur though the transfer pricing adjustment was made only in respect of international transactions with AEs undertaken by Legrand alone, amounting to Rs.6,65,357/- for export of finished goods. There are no TP adjustments in respect of international transactions with AEs undertaken by Novateur for which a separate Form 3CEB is on record, meaning thereby that the transactions reported there in have been accepted as such being at ALP. 8.1. Further, there is no separate TP order u/s 92CA(3) pursuant to reference made by the ld. Assessing Officer having jurisdiction over Novateur. For this separate referen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessing Officer has passed the impugned final assessment order on 12.05.2015 which ought to have been passed on or before 31.03.2015 as the present case is a case with no TP adjustment, whether it is Novateur or Legrand (since in the case of Legrand, the adjustment even though made by the ld. TPO had been deleted by ld. CIT(A) and Department is not in appeal for the same). 11. Ld. CIT DR has emphasised on the contention that provision of explanation 1(i) to Section 153 of the Act applies in the present case as it is a case of re-hearing due to cadre restructuring and thus, has submitted the justification for extended time limit. In this regard, we wish to reproduce relevant extract of Explanation 1 to section 153 of the Act which is as under: "Explanation 1-For the purposes of this section, in computing the period of limitation- (1) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to section 129; or (ii) the period during which the assessment proceeding is stayed by an order or injunction of any court; or (iii) ..... ........ shall....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... being re-heard 11.2. Accordingly, the contentions made by ld. CIT DR on applicability on explanation 1(i) to section 153 of the Act to make out a case as a case of re-hearing due to cadre restructuring is not tenable. To hold so, we find force from the decision of Hon'ble High Court of Delhi in the case of Shibani Dutta Vs. CIT(A) (2012) 26 taxmann.com 105 (Del), which has extensively dealt with the provisions of sections 127 and 129 for their applicability. The relevant extract from the said decision are as under: "10. The Revenue however contends, (which was accepted by the Tribunal) that Explanation 1(iii) to Section 158BE is applicable and in computing the period of limitation for the purpose of the Section "the time taken in reopening the whole or any part of the proceeding or giving an opportunity to the assessee to be reheard under the proviso to Section 129" shall be excluded. In our opinion the contention of the Revenue is misconceived. The period of limitation gets extended under clause (iii) of Explanation 1 only by the time taken to reopen the whole or any part of the proceeding or giving an opportunity to the assessee (to be reheard) under the proviso to S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....O, Ward 2(7), Bangalore to Central Circle-25, New Delhi. Apparently because of search several cases had to be centralised and that is the reason for passing the order under section 127 and this has been referred to in Para 3 of the order of the CIT (Appeals). After the assessee's case was transferred to Delhi the Assessing Officer at Delhi issued notice under Section 158BC on 11.06.2002 calling for the block return of income. Section 129 speaks of change of an incumbent of an office without any change of the jurisdiction. Explanation-1 (iii) to Section 158BE speaks only of the proviso to Section 129. There were no earlier proceedings against the assessee pursuant to the search in Bangalore which got transferred to Delhi. The notice under Section 158BC was itself issued only by the Assessing Officer at Delhi and it is by this notice that the proceedings were commenced. If the proceedings had been commenced by the Assessing Officer at Bangalore and during the pendency of the proceedings the case had been transferred to Delhi it would possibly be argued that the proviso to Section 129 would extend the time limit. We, however, express no opinion about the same because that is not t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the period of limitation, liable to be quashed. 12.1. Ld. CIT DR has contested to make out a case that since it is a case of amalgamation of Legrand into Novateur, ultimately the onus is on Novateur only and therefore has no bearing even if a combined order has been passed by the ld. TPO. In this respect, it is to be noted that the scheme of amalgamation is effective from 01.04.2011 by the order of Hon'ble High Court of Bombay passed on 06.07.2012, hence the effective year for amalgamation is Assessment Year 2012-13 and not the year under consideration which is Assessment Year 2011-12. It is on record that two separate assessment proceedings were initiated by two different Income-tax authorities for two separate legal entities, i.e., Novateur (assessee) and Legrand. Though, Legrand did not exist at the time of culmination of the assessment proceeding so initiated, yet the same had to be brought to logical end by passing separate orders by taking into record the fact of amalgamation of Legrand into Novateur. It is a case where the statutory procedure mandated in section 144C has been attempted to be bypassed by merely mentioning the name of the assessee as the amalgamated entit....