TaxTMI 
TaxTMI 
2026 (1) TMI 617
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....n as Vodafone Mobile Services Limited, is engaged in the business of providing cellular mobile telephony services in the State of Gujarat. For the year under consideration, the assessee filed its return of income on 30.11.2012, declaring a total income of Rs. 180,97,31,710/-. The return was processed under section 143(1) of the Act. Subsequently, the case was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer made a reference to the Transfer Pricing Officer (TPO) under section 92CA(1) of the Act for determination of the arm's length price in respect of the international transactions entered into by the assessee. The Joint Commissioner of Income-tax (Transfer Pricing Officer), Ahmedabad, passed an order under section 92CA(3) of the Act dated 19.01.2016, proposing certain transfer pricing adjustments. Thereafter, the Assessing Officer passed a draft assessment order under section 144C read with section 143(3) of the Act in March 2016, incorporating the proposed transfer pricing adjustments as well as certain other disallowances. 3. Aggrieved by the draft assessment order, the assessee filed objections before the DRP under section 144C(2) of t....
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.... exempt income was earned during the relevant assessment year and, therefore, no disallowance could have been made in law. Ground No. 4 Disallowance of roaming charges - The assessee has contested the disallowance of roaming charges amounting to Rs. 86,57,30,779/-, which has been made by the AO and upheld by the DRP by invoking section 40(a)(ia) and section 40(a)(i) of the Act. The assessee's case is that roaming charges constitute standard facility charges and not fees for technical services, that no human intervention is involved, and that tax was not deductible at source. The assessee has also challenged the applicability of section 201 and the denial of deduction on this account. Ground No. 5 Disallowance of licence fees under section 35ABB - The assessee has raised grounds against the treatment of licence fees paid pursuant to the New Telecom Policy as capital expenditure amortisable under section 35ABB. It is contended that the licence fees represent revenue expenditure, or in the alternative, that the amortisation has not been correctly allowed. Ground No. 6 Disallowance of royalty paid to Wireless Planning Commission - T....
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....2-13.The additional ground specifically assails the draft assessment order passed in March 2016 under section 144C read with section 143(3) on the ground that the same was passed in the name of a company which had ceased to exist on account of amalgamation. The said ground in reproduced as below: Ground No. 14 : Grounds on Jurisdiction 14.1 That the Draft Order passed by the Assessing Officer under Section 144C read with Section 143(3) in March, 2016 was bad in law as the Draft Order was passed on a company which was no longer in existence. 14.2 That given that the Draft Assessment Order was a nullity in the eyes of law all consequential proceedings including the Final Assessment Order dated 27.01.2017 was bad in law and are liable to be quashed. 14.3 That passing of the Draft Order on an entity no longer in existence was an illegality, not being curable and hence all proceedings pursuant thereto were to be quashed. 6. The assessee has further filed an application under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking admission of additional documentary evidence in support of the additional jurisdictional ground (Ground No. ....
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....e approved scheme, Vodafone West Limited stood dissolved without winding up with effect from the appointed date, and that all business operations, assets, liabilities, registrations, licences and permits of the amalgamating entity stood vested in Vodafone Mobile Services Limited. The Assessing Officer was also requested therein to carry out all future proceedings, communications and notices in the name of Vodafone Mobile Services Limited as successor to Vodafone West Limited, and to migrate the PAN records and tax credits accordingly. 11. It was submitted that despite such a detailed and contemporaneous intimation having been furnished to the Assessing Officer, along with reference to the statutory approvals and judicial orders, the draft assessment order was nevertheless passed in March 2016 in the name of Vodafone West Limited, an entity which, as per the approved scheme, had already ceased to exist. The learned AR emphasized that the letter dated 12.02.2016 formed part of the additional evidence placed on record and squarely demonstrated that the Assessing Officer was fully apprised of the amalgamation prior to the passing of the draft order. It was submitted that these docum....
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....nal ground challenges the very jurisdiction of the Assessing Officer to frame the assessment on the footing that the draft assessment order under section 144C read with section 143(3) was passed in the name of a non-existent entity. It is well settled that a pure question of law, which goes to the root of the assessment and does not require fresh investigation of facts, can be raised at any stage of appellate proceedings. 16. The additional evidence sought to be admitted comprises the order of the Hon'ble High Court approving the scheme of amalgamation, the letters dated 12.02.2016 and 15.03.2016 addressed to the Assessing Officer, the approval of the Department of Telecommunications, and the filings made with the Registrar of Companies. These documents are purely documentary, emanate from statutory and judicial records, and are directly relevant for adjudication of the jurisdictional issue. 17. We find that these documents merely corroborate undisputed facts already borne out from the record, namely, that the amalgamating company had ceased to exist prior to the passing of the draft assessment order. Their admission is therefore necessary to enable the Tribunal to adjudicate....
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....er represents the final determination of proposed variations, subject only to the assessee's statutory right of objection. Once the draft assessment order is issued, the Assessing Officer becomes functus officio insofar as the proposed variations are concerned and cannot unilaterally alter or cure defects therein. The entire edifice of proceedings before the Dispute Resolution Panel and the final assessment order passed thereafter rests exclusively on the legal existence and validity of the draft assessment order. 22. It is equally well settled that the draft assessment order must be passed on a juridically existing and identifiable person who answers the description of an "eligible assessee" under the Act. If, on the date of passing of the draft assessment order, the entity in whose name the order is issued has ceased to exist in law, the draft order is rendered non est, as there can be no assumption of jurisdiction against a non-existent person. Such a defect strikes at the very root of the jurisdiction exercised by the Assessing Officer and is not in the nature of a procedural irregularity. The absence of a valid draft assessment order necessarily vitiates the entire chain of....