Rothe Erde (I) P Ltd (successor in the interest of Berco Undercarriages (I) P Ltd), Nashik V. Assistant Commissioner of Income-Tax, Circle 1, , Nashik

ITA 176/PUN/2022

AI Insights

The case revolves around the legal validity of various tax orders issued in the name of M/s. Berco Undercarriage India Pvt. Ltd., a company that had ceased to exist due to amalgamation with M/s. Rothe Erde (I) Pvt. Ltd. The Tribunal examined whether the transfer pricing order, draft assessment order, and directions from the Disputes Resolution Panel (DRP) issued in the name of the non-existent entity were valid. Despite the fact that the amalgamation was acknowledged in the body of the orders, they were still issued in the name of the erstwhile company, leading to the legal challenge.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124525 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-04-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 24-03-2022
• Other Referred Cases: PCIT Vs. Maruti Suzuki India Ltd. (107 taxmann.com 375) (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Scheme of amalgamation
• Section: 143(3); 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA No. 176/PUN/2022 : A.Y. 2017-18 M/s. Rothe Erde (I) Pvt. Ltd., (successor in the interest of Berco Undercarriages India Pvt. Ltd.) Gat No. 429, Village Wadivarhe At Post: Gonde, Tal. Igatpuri, Nashik. PAN: AADCR 3029 G Appellant Vs. The Asstt. C.I.T. Circle 1, Nasik Respondent Appellant by : Shri Pratik Shah Respondent by : Shri Shivraj Morey, CIT DR Date of Hearing : 13-04-2023 Date of Pronouncement : 13-04-2023 ORDER PER PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER This appeal preferred by the assessee emanates from the findings of the ld. Disputes Resolution Panel-3, Mumbai-1, dated 20-12-2021 for A.Y. 2017-18 u/s 144C(5) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) as per the grounds of appeal on record. 2. In this case, the assessee has raised both grounds on merits as well as legal grounds. First we would be adjudicating the legal ground and if therein the assessee succeeds all other grounds on merits shall become academic in nature. The legal ground raised as an additional ground of appeal is as follows: “On the facts and in the circumstances of the case and in law, the transfer pricing order dated 26.01.2021 under section 92CA(3) of the Act, draft assessment order dated 30.03.2021 under section 143(3) read with section 144C of the Act and DRP directions dated 20.12.2021 under section 144C(5) of the Act passed/issued in the name of 'Berco Undercarriages India Private Limited', a non-existent entity, are illegal, bad in law and void-ab-initio, also rendering the final assessment order dated 28.01.2022 under section 143(3) read with section 144C(13) to be illegal, bad in law and void-ab-initio. It is the humble prayer of the Appellant that the transfer pricing order, draft assessment order, DRP directions and the final assessment order be held as bad in law, illegal, null and void-ab-initio and as such, deserve to be quashed. 2 ITA No. 176/PUN/2022 Rothe Erde (I) Pvt. Ltd. A.Y. 2017-18 The Appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing.” 3. The relevant facts in this regard are that M/s. Berco Undercarriage India Pvt. Ltd. was a private limited company incorporated under the Indian Companies Act, 1956. It was succeeded in its business by M/s. Rothe Erde (I) Pvt. Ltd., the assessee in this case, under the scheme of amalgamation approved by National Company Law Tribunal (hereinafter referred to as “NCLT‟ for short), Mumbai, vide order dated 25-10-2018. The case for the captioned assessment year was selected for scrutiny. The aforestated fact of amalgamation was duly intimated to the A.O by the assessee and all the communications were made in the name of M/s. Rothe Erde (I) Pvt. Ltd. (successor in the interest of M/s. Berco Undercarriage India Pvt. Ltd.). However, the transfer pricing order dated 26-1-2021 u/s 92CA(3) of the Act and draft assessment order dated 30-3-2021 u/s 143(3) r.w.s. sec. 144C of the Act were still passed in the name of erstwhile company which was before amalgamation i.e. in the name of M/s. Berco Undercarriages India Pvt. Ltd. which was not in existence as on the date of passing of the said orders. That, both the A.O and the T.P.O though aware of the fact of amalgamation which is evident from the fact that the same is noted in the body of T.P.O‟s order as well as draft assessment order, still the respective orders have been passed in the name of M/s. Berco Undercarriages India Pvt. Ltd., a non-existent entity at that point of time. The assessee filed objections before the ld. D.R.P against draft assessment order in the name of M/s. Rothe Erde (I) Pvt. Ltd. (successor in the interest of M/s. Berco Undercarriage India Pvt. Ltd.) and the fact of said amalgamation was duly intimated to the ld. D.R.P as well. However, the ld. D.R.P issued directions dated 20-12-2021 u/s 144C(5) of the Act in the name of M/s. Berco Undercarriage India Pvt. Ltd. which was not in existence as on the date of issuance of the said directions. Therefore, even after acknowledging the fact of amalgamation in the body of their respective orders, the transfer 3 ITA No. 176/PUN/2022 Rothe Erde (I) Pvt. Ltd. A.Y. 2017-18 pricing order dated 26-1-2021, draft assessment order dated 30-3-2021 and the ld. D.R.P‟s directions dated 20-12-2021 were issued in the name of M/s. Berco Undercarriage Indi Pvt. Ltd. which is the non-existent entity at that point of time. 4. We have heard the rival contentions, considered the documents, material available on record and analysed the facts and circumstances on this legal issue. We observe from the order passed by the NCLT Mumbai approving the scheme of amalgamation wherein M/s. Berco Undercarriage India Pvt. Ltd., a private limited company was succeeded in its business by M/s. Rothe Erde (I) Pvt. Ltd. vide order dated 25-10-2018. In other words, from 25-10-2018, after approval of scheme of amalgamation by NCLT, Mumbai, the company M/s. Rothe Erde (I) Pvt. Ltd. became successor in the interest of erstwhile M/s. Berco Undercarriage India Pvt. Ltd. Thereafter, M/s. Berco Undercarriage India Pvt. Ltd. ceased to exist and for all practical purposes the entity that had emerged after the said amalgamation is M/s. Rothe Erde (I) Pvt. Ltd. Admittedly, the incident of amalgamation dated 25-10-2018 has been communicated by the assessee to the department. Inspite of that, the TP.O passed order dated 26-1-2021 which was passed in the name of M/s. Berco Undercarriage India Pvt. Ltd. which was not in existence on the date of passing of the said order. Similarly, the draft assessment order also dated 30- 3-2021 was again passed in the name of M/s. Berco Undercarriage India Pvt. Ltd. which was a non-existent entity at that relevant point of time. Even the ld. D.R.P had issued directions dated 20-12-2021 again in the name of M/s. Berco Undercarriage India Pvt. Ltd. a non-existent entity as on the date of issuance of the said directions. We further observe from the perusal of the order passed by the T.P.O, draft assessment order and the ld. D.R.P that each one of them have acknowledged in the body of their respective orders that it is the case of M/s. Rothe Erde (I) Pvt. Ltd. (successor in the interest of M/s. Berco Undercarriage India Pvt. Ltd.) but still has issued the orders in the name of M/s. 4 ITA No. 176/PUN/2022 Rothe Erde (I) Pvt. Ltd. A.Y. 2017-18 Berco Undercarriage India Pvt. Ltd., knowing fully well that the named entity was not in existence at the relevant time of passing of the respective orders due to the said amalgamation. Meaning thereby all orders of the department have been issued in the name of a non-existent entity. In this scenario, we are guided by decision of Hon‟ble Apex Court in the case of PCIT Vs. Maruti Suzuki India Ltd. (107 taxmann.com 375) (SC) where it has been held that the assessment order passed in the name of non-existing company i.e. amalgamating company, which ceased to exist, is a substantive illegality and invalid. Reverting to the facts of the present case, after approval of scheme of amalgamation by NCLT Mumbai dated 25-10-2018 the entity M/s. Berco Undercarriage India Pvt. Ltd. being the amalgamating company had ceased to exist and as we have examined all the respective orders passed by the revenue authorities post such amalgamation are in the name of the said M//s. Berco Undercarriage India Pvt. Ltd. the amalgamating company which wasn‟t existing anywhere after amalgamation dated 25-10-2018. All orders issued post this amalgamation in the name of M/s. Berco Undercarriage India Pvt. Ltd. becomes substantially illegal, invalid and void abinitio. Therefore, all subsequent proceedings including the final assessment order is also bad in law and void abinitio. We order accordingly. 5. Since the assessee succeeds in this legal ground, all other grounds, if any, raised on merits becomes academic in nature and the appeal of the assessee stands allowed. 6. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 13 th day of April 2023 Sd/- sd/- (R.S. SYAL) (PARTHA SARATHI CHAUDHURY) VICE PRESIDENT JUDICIAL MEMBER Pune; Dated, the 13 th day of April 2023 Ankam 5 ITA No. 176/PUN/2022 Rothe Erde (I) Pvt. Ltd. A.Y. 2017-18 Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The DRP Panel 3, Bombay 4. D.R. ITAT „C‟ Bench 5. Guard File BY ORDER, Sr. Private Secretary ITAT, Pune. /// TRUE COPY /// 6 ITA No. 176/PUN/2022 Rothe Erde (I) Pvt. Ltd. A.Y. 2017-18 1 Draft dictated on 13-04-2023 Sr.PS/PS 2 Draft placed before author 13-04-2023 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 13-04-2023 Sr.PS/PS 7 Date of uploading of order 13-04-2023 Sr.PS/PS 8 File sent to Bench Clerk 13-04-2023 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order