Income Tax Appellate Tribunal - Panji
Akzonobel Chemicals (India) Ltd.,, ... vs Deputy Commissioner Of Income-Tax,, on 9 February, 2018
आयकर अपीऱीय अधिकरण पण
ु े न्यायपीठ "बी" पण
ु े में
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
सुश्री सुषमा चावऱा, न्याययक सदस्य एवं श्री अयिऱ चतुवेदी, ऱेखा सदस्य के समक्ष
BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM
आयकर अपीऱ सं. / ITA No.1225/PUN/2015
यििाारण वषा / Assessment Year : 2010-11
Akzo Nobel Chemicals (India) Ltd.
(merged with Akzo Nobel India Limited
w.e.f. May 18, 2012]
Tellus Building, 2nd Floor,
209/1B/1A, Range Hills,
Pune - 411020 .... अऩीऱाथी/Appellant
PAN: AADCA3941N
Vs.
The Dy. Commissioner of Income Tax,
Circle 1(1), Pune .... प्रत्यथी / Respondent
अऩीऱाथी की ओर से / Appellant by : Shri Manish Shah
प्रत्यथी की ओर से / Respondent by : Shri Vivek Aggarwal
सन
ु वाई की तारीख / घोषणा की तारीख /
Date of Hearing : 25.01.2018 Date of Pronouncement: 09.02.2018
आदे श / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by the assessee is against the order of CIT(A)-13, Pune, dated 21.07.2015 relating to assessment year 2010-11 against order passed under section 143(3) of the Income-tax Act, 1961 (in short 'the Act').
2. The assessee has raised the following grounds of appeal:- 2 ITA No.1225/PUN/2015
Akzo Nobel India Ltd.
On the facts and circumstances of the case, and in law;
1. The Ld. Assessing Officer („AO') erred in ruling that the transactions pertaining to export of certain finished goods and Marketing Support Services (MSS) provided to group companies have not been conducted at arm‟s length, and thereby making a transfer pricing adjustment of Rs.86,62,514 to the income of the appellant. In doing so, the Ld AO/CIT(A) specifically erred in:
Making transfer pricing adjustment for export of certain finished goods of Rs.78,67,104 by:
1.1 disregarding the underlying transactional differences while considering the prices charged (for certain products) to third parties in India as CUPs for determining the arm‟s length nature of similar products exported to the AE.
Making transfer pricing adjustment for Marketing Support Services (MSS) of Rs.7,95,410 by:
1.2 disregarding the few comparable companies while determining the arm‟s length nature of Management Support Services rendered by the Appellant.
3. The assessee has also raised additional grounds of appeal which read as under:-
1. On the facts and circumstances of the case and in the law, the Deputy Commissioner of Income Tax - 1(1), Pune ("the AO") erred in passing the assessment order u/s 143(3) of the Income Tax Act, 1961 ("the Act") dated April 07, 2014 in the name of Akzo Nobel Chemicals (India) Limited which was not in existence on the date of passing the order.
2. He failed to appreciate and ought to have held that Akzo Nobel Chemicals (India) Limited had merged with Akzo Nobel India Limited vide Hon‟ble Bombay High Court order dated May 11, 2012 i.e. Akzo Nobel Chemicals (India) Limited was not in existence on April 07, 2014 when he passed the said assessment order.
3. The Appellant prays that the aforesaid order be quashed as it is void ab-initio and invalid.
4. The assessee has raised the additional grounds of appeal, which as per the assessee goes to the root of issue and does not involve any adjudication of new facts, hence the same may be admitted. In view of the ratio laid down by the Apex Court in National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC), we admit the additional grounds of appeal filed by the assessee as the issue does not involve any investigation into the facts.3 ITA No.1225/PUN/2015
Akzo Nobel India Ltd.
5. The assessee is aggrieved by the order passed us 143(3) of the Act in the name of Akzo Nobel Chemicals (India) Ltd. (hereinafter referred to as 'ANCIL'), which was not in existence on the date of passing of the order. The said concern had merged with Akzo Nobel India Ltd. (hereinafter referred to as 'ANIL') vide order of the Hon'ble Bombay High Court dated 11.05.2012 and assessment order passed on 07.04.2014 was claimed to be passed in the case of non existing entity. The learned Authorized Representative for the assessee pointed out that first jurisdictional issue raised by way of additional grounds of appeal, be decided before going into merits of additions made in the hands of assessee. He further pointed out that ANCIL had got amalgamated with ANIL w.e.f. 01.04.2011 vide order of the Hon'ble Bombay High Court dated 11.05.2012. The said intimation of amalgamation was given to the jurisdictional Assessing Officer vide letter dated 11.06.2012, copy of which is placed at pages 1 and 2 of Paper Book-2. He further pointed out that during the course of proceedings before the Transfer Pricing Officer (TPO), specific query in this regard was raised by the TPO and complete details were filed along with copy of the order of Hon'ble High Court sanctioning the scheme of amalgamation and also scheme of amalgamation which are placed at pages 268 to 296 of Paper Book along with covering letter at page 261 and 262 of the Paper Book. Our attention was drawn to the para 3 of the said letter. He further referred to the order of TPO which was passed in the name of ANCIL though complete information was available with the TPO of amalgamation of the assessee company. He further referred to the communication dated 03.02.2014 which was filed before the Assessing Officer during the course of assessment proceedings wherein also, it was clearly in the subject itself mentioned that the company has merged with ANIL w.e.f. 01.04.2011. However, the TPO passed 4 ITA No.1225/PUN/2015 Akzo Nobel India Ltd.
order on 15.01.2014, the Assessing Officer passed draft assessment order on 27.02.2014 and final order on 07.04.2014, all in the name of ANCIL. The assessee has challenged the said orders being passed on non existing entity being void ab-initio. He has placed reliance on the ratio laid down by the Apex Court in Spice Enfotainment Ltd. Vs. Commissioner of Service Tax in Civil Appeal No.285 of 2014 (TS-504-SC-2017) (SC) confirming the order of the Hon'ble High Court of Delhi in Spice Entertainment Ltd. Vs. Commissioner of Service Tax in ITA Nos.475 of 2011 & 476 of 2011, judgment dated 03.08.2011. He further placed reliance on the ratio laid down by the Hon'ble Bombay High Court in Jitendra Chandralal Navlani & Anr. Vs. Union of India in WP No.1069 of 2016, judgment dated 08.06.2016 and in Kansai Nerolac Paints Ltd. Vs. DCIT (2014) 49 taxmann.com 208 (Bom). He further pointed out that the Hon'ble High Court of Delhi in Spice Entertainment Ltd. Vs. Commissioner of Service Tax (supra) have also held that such an error is not rectifiable under sections 292B and 292BB of the Act.
6. The learned Departmental Representative for the Revenue stressed that the first letter referred by the Assessing Officer was June, 2012 was not available on record. He also referred to the Power of Attorney dated 29.12.2005 which is placed at page 284 of the Paper Book, wherein it has been clearly mentioned that the dues of erstwhile company would be taken over by the successor.
7. We have heard the rival contentions and perused the record. First, we proceed to dispose of jurisdictional issue raised by the assessee by way of additional grounds of appeal in challenging the assessment order passed in the name of ANCIL, wherein the said company had got amalgamated with ANIL 5 ITA No.1225/PUN/2015 Akzo Nobel India Ltd.
w.e.f. 01.04.2011 vide order of the Hon'ble Bombay High Court dated 11.05.2012. The assessee has challenged the orders of TPO, draft assessment order passed by the Assessing Officer and final assessment order passed by the Assessing Officer on non existing entity being void ab-initio and needs to be quashed. The assessee had furnished the return of income for the year under consideration on 14.10.2010 declaring total income of Rs.17.95 crores. Notice under section 143(2) of the Act was issued and served upon the assessee. Thereafter, assessment proceedings were taken up. The Assessing Officer made reference under section 92CA(1) of the Act to the TPO on 23.02.2012 to benchmark the international transactions detailed in the audit report in Form No.3CEB. The TPO issued notice under section 92CA(2) of the Act. The TPO passed order under section 92CA(3) of the Act on 15.01.2014 in the name of ANCIL. Thereafter, draft assessment order was also passed in the same name on 27.02.2014. The final assessment order was passed on 07.04.2014 in the same name. The CIT(A) has decided the appeal in the name of ANCIL. The grievance of the assessee before us is that despite giving an intimation of amalgamation of ANCIL with ANIL as early as 11.06.2012 to the Assessing Officer and thereafter also to the TPO, who had raised specific query in this regard vide his letter dated 08.08.2013 asking the assessee to file the requisite details with respect to change in the name. In response thereto, the assessee filed letter dated 13.09.2013 along with copy of approval of scheme of amalgamation by the Hon'ble Bombay High Court. The said communication is placed at pages 261 to 297 of Paper Book-1. The copy of first intimation dated 11.06.2012 which was filed in the office of the Assessing Officer on 13.06.2012 is placed at pages 1 and 2 of the Paper Book-2. The learned Departmental Representative for the Revenue has pointed out that the said letter is not available on record. However, the copy of letter filed by the 6 ITA No.1225/PUN/2015 Akzo Nobel India Ltd.
assessee bears the acknowledgement receipt of the DCIT, Circle 1(1), Pune dated 13.06.2012 i.e. the Assessing Officer. Thereafter, even in all the communications, the assessee has mentioned the said fact of its merger. The assessee in this regard has pointed out that the proceedings for amalgamation had started on 29.08.2011 and the Hon'ble Bombay High Court passed the order on 11.05.2012. The said intimation was filed before the Registrar of Companies on 18.05.2012. The scheme had become effective from the said date but the appointed date was 01.04.2011. The first intimation to the Assessing Officer was filed on 13.06.2012 i.e. immediately after communication was filed before the Registrar of Companies. The perusal of the said letter would reflect that the Assessing Officer was not only informed about the amalgamation but it was also pointed out that as per clause 4 the entire business had been transferred on a going concern basis to ANIL and henceforth the income tax liabilities and obligations of the assessee would become the liabilities and obligations of ANIL as per clause 8 of the scheme. Clause 15 of the scheme further provided that amalgamation was dissolution of ANCIL without being would-up. It was also pointed out that PAN of ANIL would be used in relation to the assessee as well and the new PAN was mentioned in the said letter itself. Further, even during the course of assessment proceedings, a letter in reply to various queries raised by the Assessing Officer was filed by the assessee dated 03.02.2014. In the subject itself the assessee mentioned that ANCIL had merged with ANIL w.e.f. 01.04.2011 vide the Hon'ble High Court approved the scheme on 18.05.2012. As per para 9, the factum of amalgamation w.e.f. 01.04.2011 vide the Hon'ble High Court approval was also clearly intimated. As per para 10, addresses of ANIL i.e. Registered office, sales office, etc. were also provided. In view of the above intimation having been given by the assessee, the question which arises is whether the 7 ITA No.1225/PUN/2015 Akzo Nobel India Ltd.
assessment order which has been passed by the Assessing Officer in the name of ANCIL i.e. non existing entity survives or not.
8. The Hon'ble Supreme Court in Spice Enfotainment Ltd. Vs. Commissioner of Service Tax (supra) upheld the decision of the Hon'ble High Court of Delhi in the case of Spice Entertainment Ltd. Vs. Commissioner of Service Tax (supra), wherein it was held that framing of assessment against the non-existing entity / person goes to the root of the matter and the same is not just a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a 'dead' person and thereby, the order of the Tribunal is unsustainable.
9. The Hon'ble Bombay High Court in Jitendra Chandralal Navlani & Anr. Vs. Union of India (supra) has held as under:-
"4. Normally we would not have entertained a petition as an alternative remedy to file an appeal is available to the petitioners. However, prima facie, the impugned notice has been issued in respect of a non-existing entity as Addler Security Systems Pvt. Ltd., which stands dissolved, having been struck off the Rolls of the Registrar of Companies much before its issue. Consequently, the assessment has been framed also in respect of the non- existing entity. This defect in issuing a reopening notice to a non-existing company and framing an assessment consequent thereto is a issue which goes to the root of the jurisdiction of the Assessing Officer to assess the non-existing company. Thus, prima facie, both the impugned notice dated 24th March, 2015 and the Assessment Order dated 28th March, 2016, are without jurisdiction."
10. The Hon'ble Bombay High Court in Kansai Nerolac Paints Ltd. Vs. DCIT (supra) held that the additional ground of appeal taken by the assessee in relation to passing of assessment order in the name of non-existing entity was void ab-initio, was a legal issue to be answered by the Appellate Authority and that it cannot be remanded back to the Assessing Officer. 8 ITA No.1225/PUN/2015
Akzo Nobel India Ltd.
11. The Hon'ble High Court of Delhi in Spice Entertainment Ltd. Vs. Commissioner of Service Tax (supra) had also decided the issue of whether the assessment made in the name of non-existing entity was procedural irregularity of the nature which could be cured by invoking provisions of section 292B of the Act. Applying the ratios of various High Courts i.e. the Hon'ble High Court of Punjab & Haryana in CIT Vs. Norton Motors (2005) 275 ITR 595 (P&H) and in CIT Vs. Harjinder Kaur (2009) 222 CTR 254 (P&H) held that provisions of section 292B of the Act were not applicable in such a case. The Hon'ble High Court held that The framing of assessment against a non-existing entity/person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a „dead person‟. The Hon'ble High Court thus, held that framing of assessment against non-existing entity or person being a jurisdictional defect which goes to the root of the matter and the same cannot be held to be a procedural irregularity. The said proposition was laid down on the basis that there cannot be any assessment against dead person.
12. Applying the said proposition to the facts of the present case where ANCIL had amalgamated with ANIL and necessary intimation in this regard was given to the Assessing Officer, who have also raised specific query in this regard but has failed to take cognizance of the facts of present case and the submissions made during the course of assessment proceedings and TP proceedings, we hold that assessment order passed in the name of ANCIL does not stand being an order passed on a non-existing entity. Accordingly, we quash the assessment order passed in the case. Since, we have decided the jurisdictional issue and quashed the assessment proceedings, the issue raised 9 ITA No.1225/PUN/2015 Akzo Nobel India Ltd.
on merits do not survive. The additional grounds of appeal raised by the assessee are thus, allowed.
13. In the result, the appeal of the assessee is allowed.
Order pronounced on this 9th day of February, 2018.
Sd/- Sd/-
(ANIL CHATURVEDI) (SUSHMA CHOWLA)
ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER
ऩुणे / Pune; ददनाांक Dated : 9th February, 2018.
GCVSR
आदे श की प्रयतलऱपप अग्रेपषत/Copy of the Order is forwarded to :
1. अऩीऱाथी / The Appellant;
2. प्रत्यथी / The Respondent;
3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-IT/TP, Pune;
4. The DIT (TP/IT), Pune;
5. ववबागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩण ु े "फी" / DR 'B', ITAT, Pune;
6. गार्ड पाईऱ / Guard file.
ु ार/ BY ORDER, आदे शािस सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩण ु े / ITAT, Pune