HCL Corporation Ltd., V. ACIT Circle17(1),

ITA 447/DEL/2004

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81512 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-08-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 30-01-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Cost of acquisition; Validity of assessment; Scheme of amalgamation
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH : JUDICIAL MEMBER ITA NO. 447/DEL/2004 ASSTT. YR: 2000-01 HCL CORPORATION LTD., VS. ACIT CIR. 17(1), (FOR AND ON BEHALF OF VAMA SUNDARI NEW DELHI. INVESTMENT (P) LTD.) 44, FRIENDS COLONY (EAST), NEW DELHI. PAN: AAACV 0502 B ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : S/SHRI ROHIT JAIN & ROHIT GARG C AS RESPONDENT BY : SHRI S.N. BHATIA DR DATE OF HEARING : 4-08-2014 DATE OF ORDER : 07-08-2014. O R D E R THIS APPEAL, BY THE ASSESSEE, IS DIRECTED AGAINST T HE ORDER DATED 16-10- 2003 PASSED BY THE LD. CIT(A)-XX, NEW DELHI, IN APP EAL NO. 22/2003-041, RELATING TO A.Y. 2000-01. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A CLOSELY HELD DOMESTIC COMPANY, INCORPORATED IN INDIA WITH THE PRIMARY OBJ ECTIVE OF CARRYING ON BUSINESS OF AN INVESTMENT COMPANY AND TO, INTER ALI A, BUY, INVEST, UNDERWRITE, ACQUIRE, SHARES/ OTHER SECURITIES. THE ASSESSEE HAD ACQUIRED SHARES OF VARIOUS COMPANIES SINCE ITS INCEPTION. SO ME OF THE SHARES WERE HELD BY THE ASSESSEE IN STOCK IN TRADE AND THE BALA NCE WERE HELD IN ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 2 INVESTMENT PORTFOLIO WITH THE PRIMARY INTENTION OF ACQUIRING AND RETAINING CONTROLLING STAKE OF THE COMPANIES WITHIN THE FOLD OF HCL GROUP. 2.1. THE ASSESSEE FILED ITS RETURN OF INCOME FOR A. Y. 2000-01 DECLARING INCOME OF RS. 10,68,95,940/-. THE ASSESSMENT WAS CO MPLETED AT A TOTAL INCOME OF RS. 13,39,76,121/- VIDE ORDER DATED 31-3- 2003 PASSED ON M/S VAMA SUNDARI INVESTMENT (P) LTD. 2.2. BEFORE LD. CIT(A) THE ASSESSEE, INTER ALIA, TO OK A GROUND THAT ASSESSMENT U/S 143(3) WAS BASED ON IRRELEVANT CONSI DERATION AND INCORRECT APPLICATION OF LAW AND WAS VOID AB INITIO AS THE AO HAD COMPLETED THE ASSESSMENT IN THE NAME OF NON-EXISTENT ENTITY. IT W AS POINTED OUT THAT THE COMPANY M/S VAMA SUNDARI INVESTMENT (P) LTD. GOT M ERGED UNDER THE SCHEME OF AMALGAMATION WITH M/S SLOCUM INVESTMENT P VT. LTD. W.E.F. THE APPOINTED DATE VIZ. 1-4-2000. IT WAS POINTED OUT TH AT THE SCHEME OF AMALGAMATION WAS FILED IN THE DELHI HIGH COURT ON 1 1-4-2001 AND THE HONBLE DELHI HIGH COURT VIDE ITS ORDER DATED 27-8- 2001 SANCTIONED THE SCHEME OF AMALGAMATION FROM THE APPOINTED DATE I.E. 1-4-2000. IT WAS FURTHER POINTED OUT THAT THE ORDER OF THE HONBLE D ELHI HIGH COURT WAS TAKEN ON RECORD BY THE REGISTRAR OF COMPANIES AND A CERTI FICATE WAS ISSUED ON 8- 11-2001 BY THE REGISTRAR OF COMPANIES. ACCORDINGLY, IT WAS SUBMITTED THAT M/S VAMA SUNDARI INVESTMENT (P) LTD.) STOOD DISSOLV ED ON 8-11-2001 AND CEASED TO EXIST AS A LEGAL ENTITY. THEREFORE NOTICE ISSUED BY AO U/S 143(2) ON 28-11-2001 IN THE NAME OF M/S VAMA SUNDARI INVES TMENT (P) LTD.) WAS TO A NON-EXISTENT ENTITY. IT WAS FURTHER POINTED OU T THAT ALL SUBSEQUENT PROCEEDINGS U/S 143(3) OF THE ACT WERE CONTINUED AN D CARRIED IN THE NAME OF M/S VAMA SUNDARI INVESTMENT (P) LTD.) AND THE ASSES SMENT ORDER DATED 31- ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 3 3-2003 ALONG WITH THE NOTICE OF DEMAND WAS SERVED I N THE NAME OF M/S VAMA SUNDARI INVESTMENT (P) LTD.), WHICH WAS A NON- EXISTENT ENTITY. THE ASSESSEE POINTED OUT THAT UNDER THE SCHEME OF AMALG AMATION A TRANSFEROR COMPANY CEASE TO EXIST IN THE EYES OF LAW, RELYING ON FOLLOWING DECISIONS: - SARASWATI INDUSTRIAL SYNDICATE V. CIT 186 ITR 278; - FLOWMORE PVT. LTD. VS. UPSIDC CMWP 39194 OF 1998(AL L.) - GENERAL RADIO & APPLIANCES CO. LTD. VS. M.A. KHANDE R (1986) 60 COMP CAS 1013 (SC). - CIT V. SURENDRA KUMAR BHANDANI 164 ITR 323 (PATNA); - MULCHAND RAMPURIA V. ITO 252 ITR 758 (CAL.); - SHEIKH ABDUL KADAR VS. ITO 34 ITR 451 (MP). 2.3. LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO, WHICH HAS BEEN REPRODUCED AT PAGE 2 OF LD. CIT(A)S ORDER, IN WHIC H IT HAS BEEN POINTED OUT THAT THE ASSESSMENT U/S 143 WAS MADE IN RESPECT OF INCOME WHICH HAD BEEN EARNED DURING FY 1999-2000 RELEVANT TO AY 2000-01 D URING WHICH PERIOD THE COMPANY M/S VSIPL WAS VERY MUCH IN EXISTENCE. F URTHER, IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD NEVER OBJE CTED TO BE CALLED VSIPL. THE POWER OF ATTORNEY WAS FILED BY VSIPL AND ALL RE PLIES WERE FURNISHED ON THE LETTER HEAD OF M/S VSIPL. THEREFORE, AO POINTE D OUT THAT THIS NEW GROUND COULD NOT BE RAISED. 2.4. LD. CIT(A) REJECTED THE ASSESSEES CONTENTION, INTER ALIA, POINTING OUT THAT ASSESSEE HAD NOT CHALLENGED THE AO'S JURISDICT ION AS REQUIRED U/S 124(3) AND HAD SUBMITTED TO THE JURISDICTION OF A PARTICU LAR AO AND, THEREFORE, CANNOT TURN AROUND AND SAY THAT THE OFFICER HAD NO JURISDICTION TO ASSESS HIM. LD. CIT(A) RELIED ON THE DECISION IN THE CASE OF RA M KUMAR SITARAM V. CERTIFICATE OFFICER 49 ITR 797 (CAL.). HE ALSO RELI ED ON THE DECISION IN THE ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 4 CASE OF RAJA BAHADUR KAMAKHYA NARAIN SINGH VS. UNIO N OF INDIA 51 ITR 596 (PAT.). 2.5. ON MERITS THE LD. CIT(A) PARTLY ALLOWED THE AS SESSEES APPEAL. 2.6. BEING AGGRIEVED, WITH THE ORDER OF LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE IMPUGNED ORDER IS BASED UPON IRRELEVANT CONSIDE RATIONS, INCORRECT APPLICATION OF LAW, BAD IN LAW AND VOID A B INITIO. 1.1. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE IMPUGNED ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT (THE ACT) IN THE NAME OF A NON -EXISTENT ENTITY. 1.2. THAT THE CIT(A) FAILED TO APPRECIATE THAT THER E IS NO ESTOPPEL IN LAW AND LEGAL OBJECTIONS CHALLENGING TH E JURISDICTION OF THE ASSESSING OFFICER/ VALIDITY OF THE ASSESSMENT MADE CAN BE RAISED FOR THE FIRST TIME DURING THE AP PELLATE PROCEEDINGS. 1.3. THAT THE CIT(A) ERRED IN RELYING UPON THE PROV ISIONS OF SECTION 124 OF THE ACT WITHOUT APPRECIATING THAT UN DER SECTION THE ASSESSEE IS REQUIRED TO OBJECT, DURING THE ASS ESSMENT PROCEEDINGS, IF THE INCOME-TAX OFFICER EXERCISING JURISDICTION IS NOT THE CORRECT ASSESSING OFFICER. 2. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN C ONFIRMING THE ADDITION OF RS. 1,26,09,400/- MADE BY THE ASSES SING OFFICER BY DISALLOWING THE LOSS ARISING FROM DIMINUTION IN THE VALUE OF SHARES OF NETWORK LIMITED AT THE YEAR END BY TREA TING THE SAME AS INVESTMENT AND NOT AS STOCK-IN-TRADE. 2.1. THAT THE CIT(A) ERRED IN HOLDING THAT THE SHA RES OF NETWORK LIMITED WERE ACQUIRED BY THE APPELLANT AS ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 5 INVESTMENT AND ITS TREATMENT AS STOCK-IN-TRADE- WAS NOT IN LINE WITH COMMERCIAL PRUDENCE. 2.2. THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITI ON DRAWING BASELESS, IRRELEVANT AND UNTENABLE CONCLUSIONS FRO M THE TRANSACTIONS EFFECTED BY THE APPELLANT WITHOUT JUDI CIOUSLY APPRECIATING THE FACTS OF THE CASE AND THE POSITION OF LAW. 2.3. THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITI ON WITHOUT APPRECIATING THAT NOTIONAL GAIN ARISING ON INCREASE IN THE VALUE OF SHARES OF NETWORK LIMITED AT THE YEAR END WAS BR OUGHT TO TAX IN THE EARLIER YEAR AS BUSINESS INCOME BY TREATING THE SHARES AS STOCK-IN-TRADE. 3. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN C ONFIRMING THE DISALLOWANCE OF FINANCE CHARGES OF RS. 1,44,70, 781/- CLAIMED AS DEDUCTION UNDER SECTION 36(1)(III)/ 37 O F THE ACT AS EXPENDITURE INCURRED ON BORROWED FUNDS RELATABLE TO INVESTMENT IN SHARES, INCOME WHEREFROM WAS CLAIMED AS EXEMPT, BY APPLYING THE PROVISIONS OF SECTION 14A OF THE ACT. 3.1. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT INVESTMENT IN SHARES MADE IN THE COURSE OF BUSINESS ACTIVITY, THE EXPENDITURE INCURRED ON MAKI NG INVESTMENT IN SHARES WOULD NECESSARILY BE FOR THE P URPOSES OF THE APPELLANTS BUSINESS ALLOWABLE UNDER THE PROVIS IONS OF ACT. 3.2. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE UNDER SECTION 14A OF THE ACT OF IN TEREST/ EXPENDITURE INCURRED, WITHOUT APPRECIATING THAT DIV IDEND FROM SHARES COULD NOT BE TREATED AS INCOME WHICH DOES N OT FORM PART OF THE TOTAL INCOME OF THE APPELLANT. 3.3. THAT THE CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCE IN TERMS OF SECTION 14A OF THE ACT WITHOUT APPRECIATIN G THAT THE EXPENDITURE INCURRED FOR ACQUIRING SHARES HELD AS I NVESTMENT COULD NOT BE SAID TO HAVE BEEN INCURRED FOR THE PUR POSE OF EARNING DIVIDEND INCOME. ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 6 3.4. THAT THE CIT(A) ERRED IN HOLDING THAT THE APP ELLANT FAILED TO DISCHARGE THE ONUS OF PROVING THAT THE FI NANCE CHARGES ARE ALLOWABLE UNDER SECTION 36(1)(III)/37 OF THE AC T. 4. WITHOUT PREJUDICE, THE CIT(A) ERRED IN FACTS AND IN LAW IN NOT GIVING DIRECTION FOR ADDITION OF THE ELEMENT OF FINANCE CHARGES (HELD RELATABLE TO INVESTMENT IN SHARES) AS COST OF ACQUISITION/ COST OF IMPROVEMENT OF SUCH SHARES FOR COMPUTING CAPITAL GAINS ON SALE THEREOF. 5. WITHOUT PREJUDICE, THE CIT(A) ERRED IN CONFIRMIN G THE DISALLOWANCE OF INTEREST/ EXPENDITURE INCURRED UNDE R SECTION 14A WITHOUT APPRECIATING THAT AN ORDER UNDER SECTIO N 143(1) HAVING BEEN MADE, PROVISO TO SECTION 14A OF THE ACT SPECIFICALLY BARRED INVOCATION OF THAT SECTION FOR THE ASSESSMEN T YEAR 2000- 01. 3. GROUND NOS. 1 TO 1.3 DEAL WITH THE BASIC ISSUE R EGARDING LEGALITY OF THE ASSESSMENT ORDER. LD. COUNSEL FOR THE ASSESSEE NARR ATED THE FACTS AS NOTED EARLIER AND SUBMITTED THAT IT IS EVIDENT FROM THE A SSESSMENT ORDER THAT THE FACT OF MERGER WAS BROUGHT TO THE NOTICE OF ASSESSING OF FICER BECAUSE HE HAS HIMSELF NOTED AT PAGE 2 OF HIS ORDER THAT THE ASSES SEE COMPANY AND M/S NET WORK LTD. MERGED WITH CHENNAI BASED M/S SLOCUM INVE STMENT (P) LTD. THEREFORE, THIS FACT WAS WITHIN THE KNOWLEDGE OF AS SESSING OFFICER. 4. LD. COUNSEL SUBMITTED THAT HERE THE ISSUE IS NOT REGARDING JURISDICTION OF ASSESSING OFFICER BECAUSE ASSESSEE WAS NOT CHALL ENGING THE JURISDICTION OF ASSESSING OFFICER BUT THE VERY LEGALITY OF THE ASSE SSMENT ORDER IS IN DISPUTE. HE SUBMITTED THAT SECTION 124(3) IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE ASSESSMENT HAS BEEN COMPLETED IN CASE OF NO N-EXISTENT ENTITY WHICH IS BAD IN LAW. LD. COUNSEL REFERRED TO PAGE 43 TO 5 1 OF THE PAPER BOOK, WHEREIN THE SCHEME OF AMALGAMATION IS CONTAINED TO DEMONSTRATE THAT FROM THE APPOINTED DATE VIZ. 1-4-2000, M/S VAMA SUNDARI INVESTMENT (P) LTD. GOT ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 7 MERGED WITH M/S SLOCUM INVESTMENT (P) LTD. AND THUS AFTER 1-4-2000 NO ASSESSMENT COULD BE MADE IN THE NAME OF M/S VAMA SU NDARI INVESTMENT (P) LTD. 4.1. LD. COUNSEL REFERRED TO THE DECISION OF HONBL E DELHI HIGH COURT IN COMPANY PETITION NO. 145 OF 2001, CONTAINED AT PAG ES 52 TO 63 OF THE PB THAT THE SAID TRANSFEROR COMPANIES DO WITHIN 30 DA YS AFTER THE DATE OF THIS ORDER CAUSE A CERTIFIED COPY OF THIS O RDER TO BE DELIVERED TO THE REGISTRAR OF COMPANIES FOR REGISTR ATION AND ON SUCH CERTIFIED COPY BEING SO DELIVERED, THE TRANSFE ROR COMPANIES SHALL BE DISSOLVED WITHOUT THE PROCESS OF WINDING U P AND THE REGISTRAR OF COMPANIES SHALL PLACE ALL DOCUMENTS RE LATING TO THE SAID TRANSFEROR COMPANIES AND TRANSFEREE COMPA NY SHALL BE CONSOLIDATED ACCORDINGLY. 4.2. LD. COUNSEL POINTED OUT THAT IN VIEW OF ABOVE OBSERVATIONS OF HONBLE DELHI HIGH COURT, M/S VAMA SUNDARI INVESTMENT (P) L TD. GOT DISSOLVED ON 8-11-2001 AND CEASED TO EXIST AS LEGAL ENTITY IN TH E EYES OF LAW FROM THAT DATE. HE FURTHER POINTED OUT THAT ASSESSING OFFICER WAS INFORMED OF THE AMALGAMATION VIDE LETTER DATED 15-2-2002 CONTAINED AT PAGE 5 OF THE PB AND THE ASSESSMENT ORDER HAD BEEN PASSED ON 31-3-2002. THEREFORE, THE ORDER IS CLEARLY NOT SUSTAINABLE IN LAW. HE RELIED ON FOLLOW ING DECISIONS TO SUBMIT THAT ISSUE OF NOTICE TO THE AMALGAMATED COMPANY/ TH E COMPLETION OF ASSESSMENT IN THE NAME OF THE AMALGAMATED COMPANY, SUBSEQUENT TO THE AMALGAMATION BECAME EFFECTIVE AND THE FACT OF SUCH AMALGAMATION HAVING BEEN BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER , IS BAD IN LAW AND VOID AB INITIO:- - CIT VS. AMARCHAND N. SHROFF 48 ITR 59 (SC); - BIRLA COTTON V. CIT 123 ITR 354 (DEL.); - CIT V. EXPRESS NEWSPAPER 40 ITR 38 (MAD.); ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 8 - R.C. JAIN V. CIT 140 TAXMAN 379 (DEL); - CIT V. KUMARI PRABHAVATI GUPTA 231 ITR 188 (MP); - SMT. SUDHA PRASAD V. CHIEF CIT 186 CTR 475 (JHARKHA ND); - MAKERS DEVELOPMENT SERVICES LTD. VS. CIT 40 ITD 185 (BOM); - IMPSAT (P) LTD. VS. ITO 91 ITD 354 (DEL.); - BETTER INV. LTD. V. DCIT IN ITA NO. 301/D/2005). - INDIAN MANAGEMENT ADVISORS LTD. (DEL. ITAT) - SLOCUM INVESTMENT (P) LTD. 101 TTJ 558 (DEL) - HEWLETT PACKARD (I) (P) LTD. VS. ACIT (ITA 4016/D/2 005). - MODI CORP. LTD. V. JCIT 105 TTJ 303 (DEL.) - PAMPASAR DISTILLERY LTD. V. ACIT 15 SOT 331 (KOL) - WELLWEST INVESTMENT P. LTD. ( ITA NO. 857/DEL/2004) . 4.3. LD. COUNSEL FURTHER RELIED ON VARIOUS DECISION S TO SUBMIT THAT PROCEEDINGS INITIATED AND COMPLETED ON A DEAD PERSO N ARE INVALID. LD. COUNSEL SUBMITTED THAT NOW THIS ISSUE IS SQUARELY C OVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SPICE ENTER TAINMENT LTD. VS. CIT (ITA 475 OF 2011 DATED 3-8-2011), WHEREIN THE HONB LE HIGH COURT HAS, INTER ALIA, OBSERVED AS UNDER: ACCORDING TO THE TRIBUNAL, IF THE SPICE WAS NON-EX ISTENT, THERE WAS NO REASON FOR THE AMALGAMATION COMPANY TO REPRESENT T HE SAME OR TO FEEL AGGRIEVED AGAINST THE SAID ORDER AND PREFERRED APPE AL AND GET THE SAME DECIDED ON MERITS. IN OTHER WORDS, ANY APPEAL/PREFE RRED BY A NON-EXISTENCE PERSON MUST ALSO BE TREATED AS NON-EST. ALL THESE A CTS OF THE APPELLANTS/ AMALGAMATED COMPANY CLEARLY SHOW THAT IT HAD BEEN C ONSTANTLY TREATED THE ASSESSMENT MADE AGAINST THE APPELLANT I N RESPECT OF THE ASSESSMENT OF AMALGAMATED COMPANY. FURTHER, NO PREJ UDICE IS CAUSED TO THE ASSESSEE MERELY BECAUSE IN THE BODY OF THE ASSE SSMENT ORDER NAME OF THE AMALGAMATED COMPANY IS NOT SHOWN. ON THE AFORESAID REASONING AND ANALYSIS, THE TRIBUN AL SUMMED UP THE POSITION IN PARA 14 OF ITS ORDER WHICH READS AS UND ER:- 'IN THE LIGHT OF THE DISCUSSIONS MADE ABOVE, WE, TH EREFORE, HOLD THAT THE ASSESSMENT MADE BY THE AG), IN SUBSTA NCE AND EFFECT, IS NOT AGAINST THE NON- EXISTENT AMALGAMATI NG COMPANY. HOWEVER, WE DO AGREE WITH THE PROPOSITION OR RATION DECIDED IN THE VARIOUS CASES RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSMEN T MADE ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 9 AGAINST NON EXISTENT PERSON WOULD BE INVALID AND LI ABLE TO BE STRUCK DOWN . BUT, IN THE PRESENT CASE, WE FIND THAT THE ASSESSMENT, IN SUBSTANCE AND EFFECT, HAS BEEN MADE AGAINST AMALGAMATED COMPANY IN RESPECT OF ASSESSMENT OF INC OME OF AMALGAMATING COMPANY FOR THE PERIOD PRIOR TO AMALGAMATION AND MERE OMISSION TO MENTION THE NAME OF AMALGAMATED COMPANY ALONG-WITH THE NAME OF AMALGAMATING COMPANY IN THE BODY OF ASSESSMENT AGAI NST THE ITEM 'NAME OF THE ASSESSEE' IS NOT FATAL TO THE VALIDITY OF ASSESSMENT BUT IS A PROCEDURAL DEFECT COVERED BY SE CTION. 292B OF THE ACT. WE HOLD ACCORDINGLY.' THE AFORESAID LINE OF REASONING ADOPTED BY THE TRIB UNAL IS CLEARLY BLEMISHED WITH LEGAL LOOPHOLES AND IS CONTRARY TO L AW. NO DOUBT, M/S SPICE WAS AN ASSESSEE AND AS AN INCORPORATED COMPAN Y AND WAS IN EXISTENCE WHEN IT FIND THE RETURNS IN RESPECT OF TW O ASSESSMENT YEARS IN QUESTIONS. HOWEVER, BEFORE THE CASE COULD BE SELECT ED FOR SCRUTINY AND ASSESSMENT PROCEEDINGS COULD BE INITIATED, M/S SPICE GOT AMALGAMATED WITH/MCORP PVT. LTD. IT WAS THE RESULT OF THE SCHEME OF THE AMALGAMATION FILED BEFORE THE COMPANY JUDGE OF THIS COURT WHICH WAS DULY SANCTIONED VIDE ORDERS DATED 11TH FEBRUARY, 20 04. WITH THIS AMALGAMATION MADE EFFECTIVE FROM 1ST JULY, 2003, M/ S SPICE CEASED TO EXIST. THAT IS THE PLAIN AND SIMPLE EFFECT IN LAW. THE SCHEME OF AMALGAMATION ITSELF PROVIDED FOR THIS CONSEQUENCE, INASMUCH AS SIMULTANEOUS/WITH THE SANCTIONING OF THE SCHEME, M/ S SPICE WAS ALSO STOOD DISSOLVED BY SPECIFIC ORDER OF THIS COURT. WI TH THE DISSOLUTION OF THIS COMPANY, ITS NAME WAS STRUCK OFF FROM THE ROLLS OF COMPANIES MAINTAINED BY THE REGISTRAR OF COMPANIES. , A COMPANY INCORPORATED UNDER THE INDIAN COMPANIES A CT IS A JURISTIC PERSON. IT TAKES ITS BIRTH/AND GETS LIFE WITH THE INCORPORA TION. IT DIES WITH THE DISSOLUTION AS PER THE PROVISIONS OF THE COMPANIES ACT. IT IS TRITE LAW THAT ON AMALGAMATION, THE AMALGAMATING COMPANY CEASES TO EXIST IN THE EYES OF LAW. THIS POSITION IS EVEN ACCEPTED BY THE TRIBUNAL IN P ARA-14 OF ITS ORDER EXTRACTED ABOVE. HAVING REGARD THIS CONSEQUENCE PROVIDED IN L AW, IN NUMBER OF CASES, THE SUPREME COURT HELD THAT ASSESSMENT UPON A DISSO LVED COMPANY IS IMPERMISSIBLE AS THERE IS NO PROVISION IN INCOME-TA X TO MAKE AN ASSESSMENT THEREUPON. IN THE CASE OF SARASWATI INDUSTRIAL SYND ICATE LTD. VS. CIT, 18 ITR 278 THE/LEGAL POSITION IS EXPLAINED IN THE FOLLOWIN G TERMS: 'THE QUESTION IS WHETHER ON THE AMALGAMATION OF THE INDIAN SUGAR COMPANY WITH THE APPELLANT COMPANY, THE INDIA N SUGAR COMPANY CONTINUED TO HAVE ITS ENTITY AND WAS ALIVE FOR THE PURPOSES OF SECTION 41 (1) OF THE ACT. THE AMALGAMATION OF THE TWO COMPANIES WAS EFFECTED UNDE R THE ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 10 ORDER OF THE HIGH COURT IN PROCEEDINGS UNDER SECTIO N 391 READ WITH SECTION 394 OF THE COMPANIES ACT. THE SAR ASWATI INDUSTRIAL SYNDICATE, THE TRANSFEREE COMPANY WAS A SUBSIDIARY OF THE INDIAN SUGAR COMPANY, NAMELY, THE TRANSFEROR COMPANY. UNDER THE SCHEME OF AMALGAMATIO N THE INDIAN SUGAR COMPANY STOOD DISSOLVED ON 29TH OCTOBER, 1962 AND IT CEASED TO BE IN EXISTENCE THER EAFTER. THOUGH THE SCHEME PROVIDED THAT THE TRANSFEREE COMP ANY THE SARASWATI INDUSTRIAL SYNDICATE LTD. UNDERTOOK T O MEET ANY LIABILITY OF THE INDIAN SUGAR COMPANY WHICH THA T COMPANY INCURRED OR IT COULD INCUR, ANY LIABILITY, BEFORE THE DISSOLUTION OR NOT THEREAFTER. 5. LD. DR RELIED ON THE WRITTEN SUBMISSIONS AND FUR THER REFERRED TO PAGE 4 OF THE PAPER BOOK TO POINT OUT THAT THE NOTICE IS SUED U/S 143(2) ON 28-11- 2001 IN THE NAME OF M/S VAMA SUNDARI INVESTMENT (P) LTD. WAS RECEIVED PERSONALLY, AS IS EVIDENT FROM THE NOTING ON THE SA ID NOTICE. FURTHER, HE POINTED OUT THAT AT PAGE 5 A LETTER WAS SENT FROM M /S VAMA SUNDARI INVESTMENT (P) LTD. AND REPLY WAS FILED BY THE COMP ANY. THEREFORE, THE ASSESSMENT WAS RIGHTLY FRAMED IN THE NAME OF M/S VA MA SUNDARI INVESTMENT (P) LTD. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE RECORD OF THE CASE. THE FACTS ARE NOT DISPUTED. THE ASSESSEE COMPANY GOT MERGED WITH M/S SLOCUM INVESTMENT PVT. LTD. W.E .F. 1-4-2000 VIDE ORDER DATED 27-8-2001 OF HONBLE DELHI HIGH COURT. ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 11 6.1. THE CERTIFICATE OF REGISTRATION AND ORDER OF C OURT CONFIRMING AMALGAMATION OF COMPANIES WAS ISSUED BY REGISTRAR O F COMPANIES ON 8-11-2001 AS CONTAINED AT PAGE 3 OF THE PB. THE NOT ICE U/S 143(2) WAS ISSUED ON 28-11-2001 AND, THEREFORE, IT WAS ISSUED AGAINST A COMPANY WHICH WAS NON-EXISTENT. THEREFORE, ALL SUBSEQUENT P ROCEEDINGS INCLUDING PASSING OF THE ASSESSMENT ORDER IN CONSEQ UENCE TO THIS NOTICE WERE BAD IN LAW, AS HAS BEEN HELD IN VARIOUS JUDICI AL PRONOUNCEMENTS NOTED EARLIER INCLUDING THE DECISION OF HONBLE DEL HI HIGH COURT IN THE CASE OF SPICE ENTERTAINMENT LTD. (SUPRA). FURTHER, THE ASSESSING OFFICER WAS DULY INFORMED OF AMALGAMATION VIDE LETTER DATE D 15-2-2002, CONTAINED AT PAGES 5 & 6 OF THE PB AND WHICH FACT H AS BEEN TAKEN NOTE BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER AL SO. UNDER SUCH CIRCUMSTANCES, THE ASSESSMENT ORDER CANNOT BE SUSTA INED BECAUSE NOW IT IS WELL SETTLED LAW THAT ON AMALGAMATION A COMPANY CEASED TO EXIST FROM THE APPOINTED DATE. 6.2. LD. CIT(A) HAS RELIED ON SECTION 124(3) WHICH, IN OUR OPINION, IS NOT AT ALL APPLICABLE TO THE PRESENT FACTS. SECTION 124 DEALS WITH A SITUATION WHERE JURISDICTION OF ASSESSING OFFICER I S UNDER CHALLENGE ON THE GROUND OF AREA BUT HERE IT IS NOT IN DISPUTE TH AT THE ERSTWHILE M/S VAMA SUNDARI INVESTMENT (P) LTD. WAS WITHIN THE JUR ISDICTION OF ASSESSING OFFICER. THE ISSUE IS REGARDING THE LEGALITY OF ASS ESSMENT ORDER ON NON- EXISTENT ENTITY WHICH ISSUE IS NO MORE RES INTEGRA. WE, THEREFORE, SET ASIDE THE ORDER OF LD. CIT(A) ON THIS GROUND AND HOLD THA T THE ASSESSMENT ORDER IS BAD IN LAW. GROUND NOS. 1 TO 1.3 RAISED BY THE ASSE SSEE ARE ALLOWED. ITA 447/DEL/04 HCL CORPORATION LTD. VS. ACIT 12 7. AS WE HAVE HELD THE ASSESSMENT ORDER PASSED BY T HE ASSESSING OFFICER AS BAD IN LAW, WE NEED NOT ADJUDICATE THE OTHER GRO UNDS RAISED BY THE ASSESSEE IN THIS APPEAL. 8. ASSESSEES APPEAL STANDS ALLOWED ACCORDINGLY. ORDER PRONOUNCED IN OPEN COURT ON 07-08-2014. SD/- SD/- ( JOGINDER SINGH ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07-08-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR