Eicher International Ltd., New Delhi V. DCIT, New Delhi

ITA 1824/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86914 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-12-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 15-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Scheme of amalgamation
• Section: 143(3); 10

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI S.V.MEHTORA , ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 1824 /DEL/ 2011 (ASSESSMENT YEAR: 2004 - 05 ) EICHER INTERNATIONAL LTD., (NOW KNOWN AS EICHER MOTORS LTD.), EICHER HOUSE, 12 COM MERCIAL COMPLEX, GREATER KAILASH - II NEW DELHI PAN:AAACE3882D VS. DCIT CIRCLE - 11(1) C.R.BUILDING, IP ESTATE, NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 2358 /DEL/ 2011 (ASSESSMENT YEAR: 2004 - 05 ) DCIT CIRCLE - 11(1) C.R.BUILDING, IP ESTATE, NEW DELHI VS. EICHER INTERNATIONAL LTD., (NOW KNOWN AS EICHER MOTORS LTD.), EICHER HOUSE, 12 COMMERCIAL COMPLEX, GREATER KAILASH - II NEW DELHI PAN:AAACE3882D (APPELLANT) (RESPONDENT) DATE OF HEARING 16.12.2014 DATE OF PRONOUNCEMENT 04 . 03 .2015 O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THESE ARE CROSS - APPEALS PREFERRED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF LD CIT(A) - V, NEW DELHI DATED 21.02.2011 FOR ASSESSMENT YEAR 2004 - 05. 2. AT THE OUTSET THE LD AR OF THE ASSESSEE BROUGHT TO OUR NOTICE THE ADDITIONAL GROUND RAISED, WHICH RE ADS AS UNDER: - APPELLANT BY : SH. GAURAV JAIN, ADV BHAVITA, ADV RESPONDENT BY : PARWINDER KAUR, SR. DR PAGE 2 OF 5 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT') IS BEYOND JURISDICTION, BAD IN LAW AND VOID AB INITIO. 1.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE ASSESSING OFFICER HAS ERRED IN FRAMING THE ASSESSMENT ON A NON - EXISTENT ENTITY WHICH WAS MERGED WITH EICHER GOODEARTH LTD. W.E.F. 01.04.2005. 3. HOWEVER, WE FIND THAT THE ASSESSEE HAD INFACT RAISED THE SAID LEGAL GROUND AS AN ADDITIONAL GROUND BEFORE THE CIT(A) THAT THE ASSESSEE COMPANY WAS NON - EXISTENT ON THE DATE WHEN THE ASSESSMENT ORDER WAS PASSED, SO THE ORDER AGAINST NON - EXISTENT ENTITY IS A NULLITY. HOWEVER WE FIND THAT THE SAID ADDITIONAL GROUND WAS NOT P RE SSED BEFORE THE LD CIT(A), WHO THEREFORE WAS PLEASED NOT TO ADJUDICATE THE SAME. 4. THE LD DR VEHEMENTLY OPPOSED THE ADMISSION OF THE SAID LEGAL GROUND BY ARGUING THAT SINCE THE ASSESSEE ITSELF HAS NOT PRESSED THE SAID GROUND BEFORE THE LD CIT(A), THIS GROUND CANNOT BE RAISED BEFORE US AND TO BUTTRESS HER ARGUMENT SHE RELIED ON THE FOLLOWING ORDER S : - 1. CENTRAL CAMERA C. (P) LTD. VS. THE GOVERNMENT OF MADRAS, EQUIVALENT CITATION (1971) 27 STC 112 (MAD) . 2. M.M.ANNAIAH VS. COMMISSIONER OF INCOME TAX, EQUIVALENT CITATIO N (1970) 76 ITR 582 (KAR) 3. M/S. THE CO - OP INDUSTRIAL ESTATES LTD VS. INCOME TAX OFFICER, ITA NO.658/HYD/2008 5. THE ISSUE WHETHER A LEGAL GROUND CAN BE RAISED FOR THE FIRST TIME BEFORE THIS TRIBUNAL IS NO LONGER RES - INTEGRA. IN NTPC VS CIT (1998) 229 I TR 383, THE HONBLE S UPREME COURT HAS HELD THAT QUESTION OF LAW RAISED FOR THE FIRST TIME CAN BE ADJUDICATED BY THE TRIBUNAL. THEREFORE WE ADMIT THE LEGAL GROUND AS TO WHETHER THE IMPUGNED ORDER PASSED AGAINST THE NON - EXISTENT ENTITY IS A NULLITY OR NOT . PAGE 3 OF 5 6. THE LD AR CONTENDED THAT THE HONBLE DELHI HIGH COURT ON 06.0 7 .2006 HAS PASSED AN ORDER TO A MALGA MATE / MERGE THE ASSESSEE COMPANY WITH EICHER GOOD EARTH LTD. W.E.F. 01.04.2005, SO AS PER ON THE SETTLED LAW ON THE ISSUE BEFORE US NO PROCEEDING COULD HAVE BEEN TAKEN UP IN THE NAME OF EICHER INTERNATIONAL LTD. O N OR AFTER T HE SPECIFIED DATED (I.E. 01.04.2005) . O N THE OTHER HAND THE LD DR CONTENDED THAT THE SAID GROUND WAS NOT PRESSED BEFORE LD CIT(A) SO BASED ON THE JUDGMENTS CITED S UPRA SHE PRAYED THAT THIS GROUND MAY BE REJECTED. 6. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE RECORDS. THIS ISSUE RAISED BEFORE US IS NO LONGER RES - INTEGRA. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIMENSION APPARELS PVT. LTD. IN ITA NO. 327/2014, ITA 328/2014, ITA 329/2014 , ITA 330/2014 AND ITA 332/2014 DATED 08.07.2014, CONCURRING WITH THE ORDER OF ITS OWN DIVISION BENCH IN SPICE ENTERTAINMENT LTD. VS. CIT, ITA NO.475/2011 , WHEREIN THE HONBLE HIGH COURT HELD AS FOLLOWS: - 15. IN S PICE (SUPRA), THIS COURT, AFTER DISCUSSING THE LAW DECLARED BY THE SUPREME COURT IN SARASWATI INDUSTRIAL SYNDICATE (SUPRA) STATED THAT: '9. THE COURT REFERRED TO ITS EARLIER JUDGMENT IN GENERAL RADIO AND APPLIANCES CO. LTD. VS. M.A. KHADER (1986) 60 COMP CASE 1013. IN VIEW OF THE AFORESAID CLINCHING POSITION IN LAW, IT IS DIFFICULT TO DIGEST THE CIRCUITOUS ROUTE ADOPTED BY THE TRIBUNAL HOLDING THAT THE ASSESSMENT WAS IN FACT IN THE NAME OF AMALGAMATED COMPANY AND THERE WAS ONLY A PROCEDURAL DEFECT. 10. SEC TION 481 OF THE COMPANIES ACT PROVIDES FOR DISSOLUTION OF THE COMPANY. THE COMPANY JUDGE IN THE HIGH COURT CAN ORDER DISSOLUTION OF A COMPANY ON THE GROUNDS STATED THEREIN. THE EFFECT OF THE DISSOLUTION IS THAT THE COMPANY NO MORE SURVIVES. THE DISSOLUTION PUTS AN END TO THE EXISTENCE OF THE COMPANY. IT IS HELD IN M.H. SMITH (PLANT HIRE) LTD. VS. D.L. MAINWARING (T/A INSHORE), 1986 BCLC 342 (CA) THAT 'ONCE A COMPANY IS DISSOLVED IT BECOMES A NON - EXISTENT PARTY AND THEREFORE NO ACTION CAN BE BROUGHT IN ITS N AME. THUS AN INSURANCE COMPANY WHICH WAS SUBROGATED TO THE RIGHTS OF ANOTHER INSURED COMPANY WAS HELD PAGE 4 OF 5 NOT TO BE ENTITLED TO MAINTAIN AN ACTION IN THE NAME OF THE COMPANY AFTER THE LATTER HAD BEEN DISSOLVED. 11. AFTER THE SANCTION OF THE SCHEME ON 11TH APRI L, 2004, THE SPICE CEASES TO EXIT W.E.F. 1ST JULY, 2003. EVEN IF SPICE HAD FILED THE RETURNS, IT BECAME INCUMBENT UPON THE INCOME TAX AUTHORITIES TO SUBSTITUTE THE SUCCESSOR IN PLACE OF THE SAID DEAD PERSON . WHEN NOTICE UNDER SECTION 143 (2) WAS SENT, TH E APPELLANT/AMALGAMATED COMPANY APPEARED AND BROUGHT THIS FACT TO THE KNOWLEDGE OF THE AO. HE, HOWEVER, DID NOT SUBSTITUTE THE NAME OF THE APPELLANT ON RECORD. INSTEAD, THE ASSESSING OFFICER MADE THE ASSESSMENT IN THE NAME OF M/S SPICE WHICH WAS NON EXISTI NG ENTITY ON THAT DAY. IN SUCH PROCEEDINGS AND ASSESSMENT ORDER PASSED IN THE NAME OF M/S SPICE WOULD CLEARLY BE VOID. SUCH A DEFECT CANNOT BE TREATED AS PROCEDURAL DEFECT. MERE PARTICIPATION BY THE APPELLANT WOULD BE OF NO EFFECT AS THERE IS NO ESTOPPEL A GAINST LAW.' 16. THE AUTHORITY OF THE ABOVE PRECEDENT BINDS US; WE SEE NO REASON TO DIFFER FROM THE LOGIC AND REASONING IN SPICE (SUPRA). 7. IN THE INSTANT CASE, ALSO WE FIND THAT THE ASSESSEE, VIZ EICHER INTERNATIONAL LIMITED WAS INCORPORATED UNDER THE COMPANIES ACT, 1956 ON 09.03.1994. VIDE SCHEME OF AMALGAMATION U/S 391 TO 394 OF THE COMPANIES ACT, 1956, THE ASSESSEE MERGED WITH EICHER GOODEARTH LTD. VIDE ORDER OF THE DELHI HIGH COURT, DATED 06.07.2006, WITH EFFECT FROM THE APPOINTED DATE VIZ 1 ST APRIL , 2005. AND IN TERMS OF THE SAID ORDER, A CERTIFIED COPY OF THE ORDER OF THE HONBLE DELHI HIGH COURT WAS FILED WITH THE REGISTRAR OF COMPANIES ON 08.08.2006. THE COPY OF THE ORDER OF THE DELHI HIGH COURT WAS ACCORDINGLY TAKEN ON RECORD BY THE REGISTRAR OF COMPANIES. 9 . IN THE AFORESAID SCENARIO THE ASSESSEE WAS NOT AN EXISTING LEGAL ENTITY W.E.F 1 ST APRIL 2005 WHEN THE ASSESSMENT ORDER WAS PASSED BY THE AO ON 31. 10 .2006, SO THE ASSESSMENT ORDER IS A NULLITY IN THE EYES OF LAW AND SO IS VOID. THEREFORE WE QUASH THE IMPUGNED ORDER PASSED BY THE AO ON 31.102006 AND SO THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS THUS ALLOWED. PAGE 5 OF 5 10 . SINCE WE HAVE QUASHED THE ASSESSMENT PROCEEDINGS WE ARE NOT INCLINED TO ADJUDICATE OTHER GROUNDS RAISED BY THE ASSESSEE AND TH E REVENUE BEING ACADEMIC. 11 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED AND REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 4 .03.2015 . - S D / - - S D / - ( S.V.MEHTORA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 4 / 03 / 2015 * A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELH I