TaxTMI 
TaxTMI 
2026 (9) TMI 849
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....hargeable on receivable outstanding and in doing so have grossly erred by: 2.1. ignoring the fact that working capital adjustment takes into account the impact of outstanding receivables on profitability and therefore, no further imputation of interest is warranted; 2.2. disregarding the intercompany pricing arrangement and not appreciating the fact that unlike a loan or borrowing, outstanding receivable is not an independent transaction which can be viewed on standalone basis and needs to be examined with the commercial transaction as a result of which the debit balance has come into existence; 2.3. not appreciating the contractual arrangement of the Appellant with its Associated Enterprises ("AEs") and re-characterizing the outstanding receivables from overseas AEs as loan facility and imputing interest at the rate equal to Libor plus 1.5%; 2.4. not appreciating the debtor turnover analysis submitted by the Appellant during the assessment proceedings where the Appellant's debtor turnover was less as compared to comparables' debtor turnover which demonstrates that its business practice with respect to the receivables is in line with the industry....
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.... 8,82,061/- from fixed deposits and Rs. 18,94,237/- from current account balances were not included by the assessee in its claim u/s 10AA of the Act. The Ld. AO also observed that the assessee has declared foreign exchange gain amounting to Rs. 8,63,07,694/- and contract loss of Rs. 24,41,554/- and AS-11 re-statement gains of Rs. 30,06,582/- which aggregated to net exchange gain of Rs. 8,68,72,722/- in which the assessee had claimed foreign exchange/forward contract gain excluding AS-11 re-statement component as attributable to its export business which, according to the assessee, formed part of the profits eligible for deduction u/s 10AA of the Act as being realisation of export receivables. The ld. AO rejected the assessee's contention and held that the foreign exchange gain was not derived from the specified business activity of SEZ undertaking within the meaning of Section 10AA of the Act and excluded Rs. 8,38,66,140/- from the profits eligible for deduction u/s 10AA of the Act. Aggrieved, the assessee was in appeal before the first appellate authority, who, vide order dated 22.01.2015, partly allowed the appeal filed by the assessee, against which the assessee is in appeal bef....
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....ed the said fact and stated that the file of the assessee was transferred from Jaipur and that the assessee's communication to the AO pertaining to the name change was only addressed to the ACIT, Circle-1, Jaipur and not to the Ld. AO/TPO who had subsequently passed the assessment order and the TP order. The ld. DR relied on the decision of the Hon'ble Apex Court in the case of PCIT vs. Mahagun Realtors (P) Ltd., [2022] 137 taxmann.com 91 (SC) and prayed that the assessee's additional grounds be dismissed. 7. We have heard the rival submissions, perused the material available on record. Before getting into the merits of the case, we deem it fit to adjudicate the additional ground raised by the assessee challenging the validity of the TPO's order, the draft order and the final assessment order and the subsequent order passed by the Ld.CIT(A). It is an undisputed fact that the assessee company was amalgamated vide the scheme of amalgamation vide the order passed by the Hon'ble High Courts. It is also an undisputed fact that the assessee, vide its communication dated 24.01.2011, had categorically specified that the erstwhile company ceased to exist subsequent to the amalgamation, v....
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....urt and the High Courts. 8. Per contra, the Ld. DR had relied on the decision of the Hon'ble Supreme Court in the case of Mahagun Realtors (P) Ltd. (supra)'s case which is distinguishable on facts of the present case for the reason that in Mahagun Realtors (P) Ltd., the assessee, despite having the knowledge of amalgamation, suppressed the facts of amalgamation at every stage. 9. The decision of the Hon'ble Supreme Court in Mahagun Realtors (P) Ltd. (supra) does not dilute the principles laid down in the case of Maruti Suzuki Pvt. Ltd. (supra) that an assessment framed in the name of a non-existent entity, consequent upon amalgamation, is, ordinarily, a substantive illegality and not a mere procedural defect. In Mahagun Realtors (P) Ltd., the Hon'ble Supreme Court distinguished Maruti Suzuki Pvt. Ltd., on its peculiar facts, particularly, the conduct of the assessee and the surrounding circumstances including the manner in which the amalgamating entity proceeded to participate in the assessment proceedings and the fact that the assessment order reflected the amalgamation and treated the assessee as the amalgamated entity. In the case of Maruti Suzuki Pvt. Ltd., the Ld. AO had....