M/s. Srinagar Holdings Pvt.Ltd, Jammu V. The Joint Commissioner of Income Tax, Jammu

ITA 128/ASR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9643 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K KAPOOR
• Keywords: Deemed to accrue or arise in india; Procedural lapse
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.128(ASR)/2015 ASSESSMENT YEAR:2009-10 PAN: AACCS-5595D M/S. SRINAGAR HOLDINGS PVT. LTD. VS. JT. COMMR. OF INCOME TAX, JAMMU. RANGE-2, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R.K. KAPOOR, CA RESPONDENT BY: SH. RAHUL DHAWAN, DR DATE OF HEARING: 27/07/2016 DATE OF PRONOUNCEMENT: 01/08/2016 ORDER PER A.D. JAIN, JM: THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2009-10, AGAINST THE ORDER DATED 07.01.2015, PASSED BY THE L D. CIT(A), JAMMU. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE ASSESSMENT ORDER DATED 29.12.2011 PASSED U/S 143(3) DETERMINING TOTAL INCOME OF RS.22,49,830/- IN THE N AME OF M/S. SRINAGAR HOLDINGS PVT. LTD. AND CONFIRMED BY T HE LD. CIT(A) ON AN ASSESSEE WHICH DOES NOT EXIST IN THE E YES OF LAW ON ACCOUNT OF ORDER OF MERGER BY THE HONBLE J & K HIGH COURT, IS BAD IN LAW AND DESERVES TO BE CANCELLED. 2. THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING T HE ADDITION OF RS.15 LAKHS ON ACCOUNT OF OUTSTANDING LIABILITY OF PREFERENCE SHARES REDEEMED IN THE YEAR 2000-01 AND APPEARING I N THE AUDITED BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2 009 AS ACKNOWLEDGED LIABILITY AS DEEMED INCOME OF THE ASSE SSEE FOR ITA NO.128/ASR/2015 A.Y. 2009-10 2 THE YEAR UNDER CONSIDERATION RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, IT MAY BE HELD THAT THERE WAS NO REMISSION OR CESSATION OF AN Y TRADING LIABILITY DURING THE YEAR UNDER CONSIDERATION AND A S SUCH, THE OUTSTANDING ACKNOWLEDGED LIABILITY OF RS.15 LA KHS TOWARDS REDEEMED PREFERENCE SHARES COULD NOT BE TRE ATED AS DEEMED INCOME OF THE ASSESSEE U/S 41(1). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE OUTSTANDIN G LIABILITY OF RS.15 LAKHS WAS NOT ON ACCOUNT OF TRADING LIABIL ITY; AND AS SUCH, THE PROVISION OF SECTION 41(1) COULD NOT BE I NVOKED. 2. AS PER THE ORDER UNDER APPEAL, THE ASSESSEE, SRI NAGAR HOLDINGS PVT. LTD. MERGED WITH SUMANT INVESTMENTS PVT. LTD., AS PER ORDER DATED 08.06.2011 PASSED BY THE HONBLE J & K HIGH COURT, THE ASSESSMENT ORDER IS DATED 29.12.2011. 3. BY WAY OF GROUND NO.1, THE ASSESSEE HAS CONTENDE D THAT THE ASSESSMENT ORDER DATED 29.12.2011, AS CONFIRMED BY THE LD. CIT(A) BY VIRTUE OF THE IMPUGNED ORDER, STANDS PASSED ON THE ASSESSEE, WHICH DOES NOT EXIST IN THE EYES OF LAW ON ACCOUNT OF, ORDER D ATED 09.09.2011, OF MERGER OF THE ASSESSEE, BY THE HONBLE J & K HIGH C OURT, IS BAD IN LAW AND DESERVES TO BE CANCELLED. 4. FOR THE ABOVE PROPOSITION, THE LD. COUNSEL FOR T HE ASSESSEE HAS PLACED STRONG RELIANCE ON THE FOLLOWING CASE LAWS: I) SPICE INFOTAINMENT (P) LTD. VS. CIT, 247 CTR 500 (DELHI) II) SMT. KESAR DEVI VS. CIT, 321 ITR 344 (RAJ.) III) JK AGENCIES LTD. VS. CWT, 2011-TIOL-217 (KOL.) ITA NO.128/ASR/2015 A.Y. 2009-10 3 IV) RASTOGI ENGINEERING UDYOG PVT. LTD. VS. CIT 2016- TIOL-406- HIGH COURT OF DELHI). V) CIT VS. MICRON STEELS PVT. LTD., 372 ITR 386 (DEL HI) 5. THE LD. DR, ON THE OTHER HAND, CONTENDED THAT T HIS IS A PROCEDURAL IRREGULARITY WHICH CAN BE CURED UNDER SECTION 292B OF THE ACT. 6. WE HAVE HEARD THE PARTIES ON THE ABOVE ISSUE. TH E FACTUM OF THE PASSING OF THE ORDER DATED 08.06.2011 BY THE HONBL E HIGH COURT DOES NOT STAND DISPUTED. IN FACT, THIS HAS BEEN TAKEN NO TE OF BY THE LD. CIT(A) IN FIRST SUB-PARA OF PARA-3 OF THE IMPUGNED ORDER, AS A SUBMISSION OF THE ASSESSEE AND WHICH WAS NOT REPELLED. 7. THE ERSTWHILE SUGAR HOLDINGS PVT. LTD., JAMMU WA S, THUS, MERGED WITH M/S. SUMANT INVESTMENTS PVT. LTD., AS PER THE AFORESAID ORDER DATED 08.06.2011 PASSED BY THE HONBLE J & K HIGH COURT. IT THUS, STOOD DISSOLVED ON MERGER WITH M/S. SUMANT INVESTMENTS P VT. LTD.. SUCH AMALGAMATIONS ARE GOVERNED BY SECTION 391 AND 394 O F THE COMPANIES ACT, 1956. NOW, NO ASSESSMENT CAN BE MADE ON A MERG ED COMPANY OR A COMPANY AMALGAMATED WITH ANOTHER ONE. IT HAS BEEN S O HELD IN A PLETHORA OF DECISIONS, INCLUDING THOSE RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. IN MICRON STEELS PVT. LTD. (SUPRA), IT HA S BEEN HELD THAT ONCE THE ASSESSMENT WAS FRAMED ON AN EXISTING ENTITY ON AMALGAMATION BY MERGER WITH ANOTHER ONE, THE FRAMING OF SUCH ASSESS MENT WAS NOT A PROCEDURAL IRREGULARITY OF THE NATURE AS COULD BE CURED BY INVOKING THE PROVISIONS OF SECTION 292B OF THE ACT. THE OBJECTI ON OF THE LD. DR THUS, ITA NO.128/ASR/2015 A.Y. 2009-10 4 STANDS ADEQUATELY ANSWERED. NO DECISION CONTRARY TO ONES, RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE, HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR. 8. ACCORDINGLY, FINDING THE GRIEVANCE OF THE ASSESS EE BY WAY OF GROUND NO.1 TO BE JUSTIFIED, THE SAME IS ACCEPTED. 9. AS A RESULT, THE ASSESSMENT MADE ON THE AMALGAMA TED SRINAGAR HOLDINGS PVT. LTD., IS QUASHED. 10. AS A CONSEQUENCE OF THE QUASHING OF THE ASSESSM ENT ORDER, NOTHING FURTHER SURVIVES FOR ADJUDICATION. 11. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/08/ 2 016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 01/08/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SRINAGAR HOLDINGS PVT. LTD., JAMM U. 2. THE JCIT, RANGE-2, JAMMU. 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.