Genpact Infrastructure (Hyderabad) Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6587/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3988 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 26-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Transfer pricing; Principle of natural justice; Bad and doubtful debts; Procedural lapse; Scheme of amalgamation
• Section: 143(3); 92D; 234B; 133(6); 143(2); 43

Judgement Text

1 ITA NO. 6587/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I-1 NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 6587/DEL/20 16 (A.Y 2008-09) (THROUGH VIDEO CON FERENCING) GENPACT INDIA PVT. LTD. (FORMERLY KNOWN AS EMPOWER RESEARCH KNOWLEDGE SERVICES PVT. LTD.) {(ERSTWHILE GENPACT INDIA) (ERSTWHILE GENPACT INFRASTRUCTURE (HYDERABAD) PVT. LTD.)} DLF CITY, PHASE V, SECTOR 53, GURGAON-122002, HARYANA, INDIA (APPELLANT) VS DCIT CIRCLE-10(1) NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 28/12/2011 PASSED BY CIT(A)- 37, NEW DELHI FOR ASSESSMENT YEA R 2008-09. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- GROUNDS OF APPEAL 1. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE HON'BLE COMMISSIONER OF INCOME TAX (A PPEALS) ('CIT(A)')/LD. AO IS BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHILE APPELLANT BY SH. VISHAL KALRA, ADV & MS. REEMA MALIK, ADV RESPONDENT BY SH. M. BARNWAL, SR. DR DATE OF HEARING 01.10.2020 DATE OF PRONOUNCEMENT 03 .11.2020 2 ITA NO. 6587/DEL/2016 ACKNOWLEDGING THAT THE ASSESSMENT PROCEEDINGS UNDER TAKEN BY THE LD. AO WERE NOT IN ACCORDANCE WITH THE SCHEME OF SECTION 1 44C OF THE ACT AND CONSIDERING THAT THE ASSESSMENT ORDER GIVING EFFECT TO DRP DIRECTIONS WAS NOT PASSED WITHIN THE PERMITTED TIME PERIOD, THE HON'BL E CIT(A) ERRED IN NOT EXPLICITLY QUASHING THE IMPUGNED ASSESSMENT PROCEED INGS, BEING VOID AB INITIO. 3. THE LD. AO ERRED ON FACTS AND IN LAW IN ENHANCIN G THE INCOME OF THE APPELLANT BY INR 83,857,011 HOLDING THAT THE INTERN ATIONAL TRANSACTIONS PERTAINING TO PROVISION OF INFORMATION TECHNOLOGY E NABLES SERVICES ('ITES') AND COST REIMBURSEMENTS DO NOT SATISFY THE ARM'S LENGTH PRINCIPLE ENVISAGED UNDER THE ACT AND IN DOING SO HAVE GROSSLY ERRED BY: A. NOT APPRECIATING THAT NONE OF THE CONDITIONS SET O UT IN SECTION 92C(3) OF THE ACT ARE SATISFIED IN THE PRESENT CASE; B. IMPUTING A MARK-UP ON THE INTERNATIONAL TRANSACTIO N PERTAINING TO REIMBURSEMENT OF EXPENSES RECEIVED FROM ASSOCIATED ENTERPRISE ('AE'), IGNORING THE FACT THAT SUCH REIMBURSEMENTS ARE MERE NONCORE, NON-VALUE ADDING PASS THROUGH TRANSACTIONS; THEREBY TREATING SUCH COST REIMBURSEMENT TRANSACTION AS PART OF THE CORE TRANSACTION OF THE APPELLANT AND RE-COMPUTING THE PROFIT LEVEL INDICATOR ('PLI') AFTER CONSIDERIN G THE SAME AS PART OF THE OPERATING REVENUE AND OPERATING COST; C. REJECTING THE ADJUSTMENT FOR UNUTILIZED CAPACITY M ADE BY THE APPELLANT TO ITS PROFIT TO EVEN OUT THE IMPACT OF UNUTILIZED CAP ACITY ON ITS PROFITABILITY WHEN IT IS BEING COMPARED TO OLD ESTABLISHED COMPANIES I N THE INDUSTRY; D. REJECTING THE TRANSFER PRICING ('TP') DOCUMENTATIO N MAINTAINED BY THE APPELLANT UNDER SECTION 92D OF THE ACT AND RULE 10D OF THE RULES AND DISREGARDING THE ALP AS DETERMINED BY THE APPELLANT IN THE TP DOCUMENTATION; E. DISREGARDING MULTIPLE YEAR/ PRIOR YEARS' DATA USED BY THE APPELLANT IN THE TP DOCUMENTATION AND HOLDING THAT CURRENT YEAR (I.E . FINANCIAL YEAR ('FY') 2007-08) DATA FOR COMPARABLE COMPANIES SHOULD BE US ED DESPITE THE FACT THAT THE SAME WAS NOT NECESSARILY AVAILABLE TO THE APPEL LANT AT THE TIME OF 3 ITA NO. 6587/DEL/2016 PREPARING ITS TP DOCUMENTATION; F. REJECTING COMPARABILITY ANALYSIS UNDERTAKEN BY THE APPELLANT IN THE TP DOCUMENTATION/ FRESH SEARCH AND CONDUCTING A FRESH COMPARABILITY ANALYSIS BASED ON APPLICATION OF THE FOLLOWING ADDI TIONAL/ REVISED FILTERS IN DETERMINING THE ALP: I. EXCLUSION OF COMPANIES WHOSE DATA FOR FY 2007-08 WA S NOT AVAILABLE; II. EXCLUSION OF COMPANIES WITH RELATED PARTY TRANSACTI ONS GREATER THAN 25% OF THEIR SALES; III. EXCLUSION OF COMPANIES WITH EXPORT SALES THAT ARE LESS THAN 25% OF THEIR TOTAL REVENUE; IV. EXCLUSION OF COMPANIES WITH DIMINISHING REVENUES/ PERSISTENT LOSSES FOR LAST THREE YEARS UPTO AND INCLUDING FY 2007-08; V. EXCLUSION OF COMPANIES HAVING DIFFERENT FINANCIAL YEAR ENDING (I.E.NOT MARCH 31, 2008); AND REJECTING, IN PARTICULAR, THE FOLLOWING FILTER S APPLIED BY THE APPELLANT IN ITS FRESH SEARCH: VI. COMPANIES HAVING OTHER OPERATING INCOME (I.E. INCOME OTHER THAN MANUFACTURING AND TRADING INCOME) TO SALES GREATER THAN 50% WERE ACCEPTED; VII. COMPANIES HAVING RESEARCH & DEVELOPMENT COSTS TO SALES LESS THAN 3% WERE ACCEPTED; VIII. COMPANIES WITH NET WORTH LESS THAN ZERO WERE REJECTED; IX. COMPANIES HAVING ADVERTISING, MARKETING AND DIS TRIBUTION COSTS TO SALES LESS THAN 3% WERE ACCEPTED. 3.1. INCLUDING HIGH-PROFIT MAKING COMPANIES IN THE FIN AL COMPARABLES SET FOR BENCHMARKING A COMPANY THAT IS IN ITS INITIAL Y EAR OF BUSINESS OPERATIONS AND IS STILL IN THE SET-UP AND A NASCENT STAGE SUCH AS THE APPELLANT (DISREGARDING JUDICIAL PRONOUNCEMENTS ON THE ISSUE) , THUS DEMONSTRATING AN INTENTION TO ARRIVE AT A PRE-FORMULATED OPINION WIT HOUT COMPLETE AND ADEQUATE APPLICATION OF MIND WITH THE SINGLE-MINDED INTENTIO N OF MAKING AN ADDITION TO THE RETURNED INCOME OF THE APPELLANT; 3.2. INCLUDING CERTAIN COMPANIES HAVING SIGNIFICANTLY H IGHER TURNOVER VIS-A-VIS 4 ITA NO. 6587/DEL/2016 THE ASSESSEE; 3.3. INCLUDING CERTAIN COMPANIES THAT ARE NOT COMPARABL E TO THE APPELLANT IN TERMS OF FUNCTIONS PERFORMED, ASSETS EMPLOYED AND R ISKS ASSUMED; 3.4. RESORTING TO ARBITRARY REJECTION OF LOW-PROFIT/ LO SS MAKING COMPANIES BASED ON ERRONEOUS AND INCONSISTENT REASONS; 3.5. EXCLUDING CERTAIN COMPANIES ON ARBITRARY/ FRIVOLOU S GROUNDS EVEN THOUGH THEY ARE COMPARABLE TO THE APPELLANT IN TERMS OF FU NCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS ASSUMED; 3.6. COLLECTING SELECTIVE INFORMATION OF THE COMPANIES B Y EXERCISING POWER GRANTED TO SECTION 133(6) OF THE ACT THAT WAS NOT A VAILABLE TO THE APPELLANT IN THE DOMAIN AND RELYING ON THE SAME FOR COMPARABILIT Y PURPOSES (AND TO THE SENT OF COMPLETELY IGNORING RELIABLE DATA AVAILABLE IN PUBLIC DOMAIN/ ANNUAL REPORTS IN NUMEROUS CASES) A. AND FURTHER IN DOING SO VIOLATING THE FUNDAMENTA L PRINCIPLES OF NATURAL JUSTICE BY NOT SHARING WITH THE APPELLANT, IN CASE OF A NUMBER OF COMPARABLES, THE INFORMATION/ REPLY RECEIVED BY THE LD. TPO/ LD. AO U/S 133(6) 3.7. EXCLUSION OF CERTAIN COST SUCH AS PROVISION FO R DOUBTFUL DEBTS AND FOREIGN EXCHANGE LOSS OR GAIN FROM THE COST BASE IN COMPUTA TION OF MARK-UP OF COMPARABLE COMPANIES; 4. THE LD. AO ERRED ON FACTS AND IN LAW IN ENHANCIN G THE INCOME OF THE APPELLANT BY RS. 8,551,748 AND IN DOING SO HAVE GRO SSLY ERRED BY TREATING OUTSTANDING RECEIVABLES FROM AE AS LOAN FACILITY AN D IMPUTING INTEREST AT 17.26% AND IN DOING SO HAVE GROSSLY ERRED BY: A. DISREGARDING THE INTERCOMPANY PRICING ARRANGEMENT AND NOT APPRECIATING THE FACT THAT UNLIKE A LOAN OR BORROWING, OUTSTANDI NG RECEIVABLE IS NOT AN INDEPENDENT TRANSACTION WHICH CAN BE VIEWED ON STAN DALONE BASIS AND NEEDS TO BE EXAMINED WITH THE COMMERCIAL TRANSACTION AS A RESULT OF WHICH THE DEBIT BALANCE HAS COME INTO EXISTENCE; B. NOT APPRECIATING THE CONTRACTUAL ARRANGEMENT OF TH E APPELLANT WITH ITS ASSOCIATED ENTERPRISES ,('AES') AND RE-CHARACTERIZI NG THE OUTSTANDING RECEIVABLES FROM OVERSEAS AES AS LOAN FACILITY AND IMPUTING INTEREST; 5 ITA NO. 6587/DEL/2016 C. IGNORING THE FACT THAT WORKING CAPITAL ADJUSTMENT TAKES INTO ACCOUNT THE IMPACT OF OUTSTANDING RECEIVABLES ON PROFITABILITY AND THEREFORE, NO FURTHER IMPUTATION OF INTEREST IS WARRANTED; D. NOT APPRECIATING THE FACT THAT THE CREDIT PERIOD P ROVIDED BY THE APPELLANT TO ITS AE IS WITHIN THE TIMELINE PERMITTED BY THE R ELEVANT RESERVE BANK OF INDIA GUIDELINES AND THEREFORE, CANNOT BE CHALLENGE D; E. WITHOUT PREJUDICE TO OTHER CONTENTIONS OF THE APPE LLANT, NOT APPRECIATING THAT AS PER THE JUDICIAL PRECEDENCE, THE IMPUTATION OF INTEREST HAS TO BE SEEN ON AMOUNT OUTSTANDING FOR MORE THAN SIX MONTH AS ON DATE OF BALANCE SHEET; F. WITHOUT PREJUDICE TO OTHER CONTENTIONS OF THE APPE LLANT, NOT APPRECIATING THAT IF AT ALL INTEREST IS TO BE IMPUTED, INSTEAD O F AN AD-HOC RATE OF 17.26%, THE LIBOR RATE FOR THE FY 2007-08 SHOULD BE APPLIED FOR IMPUTING INTEREST SINCE RECEIVABLES OUTSTANDING WERE IN FOREIGN CURRENCY; G. WITHOUT PREJUDICE TO OTHER CONTENTIONS OF THE APPE LLANT, NOT APPRECIATING THAT A NONINVESTMENT OR NON-FINANCE COMPANY SUCH AS THE APPELLANT WOULD NOT INVEST ITS RECOVERED EARNINGS IN RISKY LOAN DEA LS, RATHER PARK THE FUNDS IN SHORT TERM RISK FREE LIQUID SCHEMES SUCH AS FIXED D EPOSITS UNTIL REDEPLOYMENT OF FUNDS INTO THE BUSINESS, THEREBY EARNING AN INCO ME ON THE OUTSTANDING RECEIVABLES AT A RATE APPLICABLE TO SHORT TERM DEPO SITS AND NOT THE RATE APPLICABLE TO LOANS. 5. THE LD. AO HAVE GROSSLY ERRED BY DISREGARDING JU DICIAL PRONOUNCEMENTS IN INDIA IN UNDERTAKING THE TP ADJUSTMENT. 6. THE LD. AO HAS GROSSLY ERRED ON FACTS AND IN LAW BY LEVYING INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT MECHANICALLY AND WITHOUT RECORDING ANY SATISFACTORY REASONS FOR THE SAME. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE T O EACH OTHER. ADDITIONAL GROUNDS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ORDERS PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)/ AO)/ TRANSFER PRICING OFFICER (TPO) ARE BAD IN LAW AND VOID AB INITIO AS THE SAME HAVE BEEN 6 ITA NO. 6587/DEL/2016 PASSED ON A NON-EXISTENT ENTITY, NAMELY GENPACT INF RASTRUCTURE (HYDERABAD) PVT. LTD. 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING IT AND IT ENABLED SERVICES TO DIFFERENT CLIENTS. THE ASSESSE E ALSO RECEIVED THE REIMBURSEMENT OF EXPENSES FROM ITS ASSOCIATED COMPA NIES IN BERMUDA. THE ASSESSEE ALSO GOT SUBSTANTIAL AMOUNTS OUTSTANDING F ROM AE GENPACT INTERNATIONAL INC (HUNGARIAN BRANCH), WHICH HAS BEE N OUTSTANDING FOR A VERY LONG TIME. THE ASSESSEE FILED E-RETURN OF INCOME O N 8/10/2008 DECLARING INCOME OF RS. 5,65,511/-. GENPACT INFRASTRUCTURE ( HYDERABAD) PVT. LTD., ERSTWHILE COMPANY AMALGAMATED WITH GENPACT INDIA W. E.F. APRIL 1, 2010, VIDE ORDER DATED NOVEMBER, 19, 2010 PASSED BY THE HONBL E DELHI HIGH COURT. THE ASSESSING OFFICER WAS INFORMED ABOUT THE SCHEME OF AMALGAMATION VIDE LETTER DATED 24/1/2011. THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER, U/S 143 (3) OF THE INCOME TAX ACT, 1961 ON DECEMBER, 28 , 2011, IN THE NAME OF ERSTWHILE COMPANY I.E. GENPACT INFRASTRUCTURE (HYD ERABAD) PVT. LTD. AS PER THE SCHEME OF MERGER APPROVED BY THE HONBLE DELHI HIGH COURT, THREE COMPANIES NAMELY GENPACT INFRASTRUCTURE (HYDERABAD) PVT. LTD., GENPACT INFRASTRUCTURE (BHOPAL) PVT. LTD., GENPACT INFRASTR UCTURE (KOLKATA) PVT. LTD., GOT MERGED WITH GENPACT INDIA. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE US. 5. THE LD. AR HAS ARGUED ON THE ADDITIONAL GROUND T HAT THE ASSESSMENT ORDER PASSED IS BAD IN LAW AND VOID AB INITIO AS TH E SAME HAVE BEEN PASSED ON A NON-EXISTENT ENTITY NAMELY GENPACT INFRASTRUCTURE (HYDERABAD) PVT. LTD. THE LD. AR SUBMITTED THAT THE IMPUGNED ASSESSMENT PROCE EDINGS WERE CONTINUED IN THE NAME OF NON-EXISTENT MERGE ENTITY I.E. GE NPACT INDIA AND FINAL ASSESSMENT ORDER WAS ALSO PASSED IN THE NAME OF NON -EXISTENT ENTITY. THUS, THE GRIEVANCE OF THE ASSESSEE IS RELATED TO THE VAL IDITY OF THE ASSESSMENT ORDER 7 ITA NO. 6587/DEL/2016 FRAMED U/S 143(3) READ WITH SECTION 144C(1). GENPACT INFRASTRUCTURE (HYDERABAD) PVT. LTD., ERSTWHILE COMPANY AMALGAMATE D WITH GENPACT INDIA W.E.F. APRIL 1, 2010, VIDE ORDER DATED NOVEMBER, 19 , 2010 PASSED BY THE HONBLE DELHI HIGH COURT. THE LD. AR SUBMITTED THA T THE ASSESSING OFFICER WAS INFORMED ABOUT THE SCHEME OF AMALGAMATION VIDE LETT ER DATED 24/1/2011 ADDRESSED TO ACIT, CIRCLE 1, JAIPUR AS WELL AS TO ADDL. CIT, RANGE 12, NEW DELHI AND ALSO TO ACIT, CIRCLE 12(1), NEW DELHI. THE LD. AR RELIED UPON THE FOLLOWING DECISIONS OF THE VARIOUS HIGH COURT AND T HE APEX COURT AS WELL AS THE TRIBUNAL: I) MARUTI SUZUKI INDIA LTD. VS. DCIT ITA NO. 902/DE L/2017 DATED 06.04.2017 II) PCIT VS. MARUTI SUZUKI INDIA LIMITED (2019) 416 ITR 613 (SC) III) GENPACT INFRASTRUCTURE (BHOPAL) PVT. LTD. (NOW MERGED WITH GENPACT INDIA) V. DCIT (ITA NO. 199/DEL/2015 DATED 27.04.20 18 TRI. IV) GENPACT INFRASTRUCTURE (KOLKATA) PVT. LTD. (NOW MERGED WITH GENPACT INDIA) V. DCIT (ITA NO. 198/DEL/2015 DATED 27.04.20 18 TRI. V) PCIT V. GENPACT INDIA (PREVIOUSLY KNOWN AS GENPA CT INFRASTRUCTURE (BHOPAL) PRIVATE LIMITED)(ITA 168/2019, CM APPL. 40 543/2019 ORDER DATED 17.09.2019) DELHI HIGH COURT VI) PCIT V. GENPACT INDIA (PREVIOUSLY KNOWN AS GENP ACT INFRASTRUCTURE (KOLKATA) PRIVATE LIMITED)(ITA 172/2019, CM APPL. 4 0541/2019 ORDER DATED 17.09.2019) DELHI HIGH COURT VII) PCIT V. TRANSCEND MT SERVICES (P.) LTD. (2019) 109 TAXMANN.COM 421 (DEL.) VIII) DCIT VS. MAPSA LOGISTICS (P.) LTD. ITA NOS. 2 666, 2667 & 2669/DEL/2017 TRI. IX) V3S INFRATECH LTD. VS. DCIT ITA NOS. 6514 & 651 5/DEL/2016 X) SPICE ENTERTAINMENT LTD. VS. CIT 280 ELT 43 (DEL ) XI) CIT VS. SPICE INFOTAINMENT LTD. CIVIL APPEAL 28 5 OF 2014, JUDGMENT DATED NOVEMBER 2, 2017 (SC) XII) CIT VS. DIMENSION APPARELS (P) LTD. (2014) 370 ITR 288 8 ITA NO. 6587/DEL/2016 XIII) PCIT VS. MARUTI SUZUKI INDIA LIMITED (2017) 3 97 ITR 681 (DEL) XIV) PCIT VS. MARUTI SUZUKI INDIA LIMITED (SLP(C) D IARY NO. 14106 OF 2018) XV) CIT VS. MICRA INDIA (P.) LTD. (2015) 231 TAXMAN 809 XVI) PCIT VS. NOKIA SOLUTIONS AND NETWORKS INDIA PV T. LTD. 402 ITR 21 (DEL. HC) XVII) CIT VS. MICRON STEEL (P.) LTD. (2015) 372 ITR 386 XIX) BDR BUILDERS AND DEVELOPERS PVT. LTD. VS. ACIT (2017) 397 ITR 529 (DEL. HC) 6. THE LD. DR SUBMITTED THAT NOTICE U/S 143(2) WAS VALIDLY SERVED ON THE AMALGAMATING COMPANY. THE LD. DR FURTHER SUBMITTED THAT THE CLAIM OF THE ASSESSEE OF HAVING GIVEN THE ASSESSEE INFORMATION O F APPROVAL DATED 19/11/2020 OF THE HONBLE DELHI HIGH COURT TO THE A SSESSING OFFICER AT JAIPUR COULD NOT BE ESTABLISHED AND IT CANNOT BE CLAIM THA T THE ASSESSING OFFICER COULD ANY WAY HAD THE INFORMATION OF THE MERGER. G ENPACT INFRASTRUCTURE (HYDERABAD) PVT. LTD., CANNOT BE CALLED AS NON FOUN D COMPANY AND CAN VERY MUCH SAID TO EXIST AT THE COMMON ADDRESS UNDER THE SHADOW AND UMBRELLA OF THE GENPACT INDIA PVT. LTD. TO PROVISIONS TO SECTIO N 170(1)(A) REQUIRED TO FRAME AN ASSESSMENT IN THE CASE OF THE PREDECESSOR ENTITY I.E. ERSTWHILE GENPACT INFRASTRUCTURE HYDERABAD PVT. LTD. IN RESPECT OF IT S INCOME UP TO DATE OF SUCCESSION. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE ADDITIONAL GROUND IS A LEGAL GROUND WH ICH GOES TO THE ROOT OF THE MATTER RELATING TO SUSTAINABILITY OF THE ASSESSMENT ORDER ITSELF, THEREFORE, WE ARE ADMITTING THE SAID GROUND. THE ASSESSING OFFICER W AS VERY WELL AWARE THAT THE COMPANY GOT AMALGAMATED W.E.F 1 ST APRIL, 2010. THE SAID FACTS WERE BROUGHT ON RECORD BY ASSESSEE BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 24/1/2011 WHICH WAS FILED ON 3 RD FEBRUARY, 2011. THIS SAID LETTER WAS ALSO MENTION ED IN THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN CA SES OF OTHER ENTITIES OF GENPACT INDIA. THE RELIANCE UPON THE DECISION OF T HE HONBLE SUPREME COURT 9 ITA NO. 6587/DEL/2016 IN CASE OF MARUTI SUZUKI INDIA LTD. (SUPRA) BY THE LD. AR IS APT IN THE PRESENT CASE. THE HONBLE SUPREME COURT OBSERVED IN PARA 19 AS FOLLOWS: 19. (III) THIRDLY, THE CONSEQUENCE OF THE SCHEME OF AMA LGAMATION APPROVED UNDER SECTION 394 OF THE COMPANIES ACT 1956 IS THAT THE AMALGAMATING COMPANY CEASED TO EXIST. IN SARASWATI INDUSTRIAL SY NDICATE LTD., THE PRINCIPLE HAS BEEN FORMULATED BY THIS COURT IN THE FOLLOWING OBSERVATIONS: 5. GENERALLY, WHERE ONLY ONE COMPANY IS INVOLVED I N CHANGE AND THE RIGHTS OF THE SHAREHOLDERS AND CREDITORS ARE VARIED , IT AMOUNTS TO RECONSTRUCTION OR REORGANISATION OF SCHEME OF ARRAN GEMENT. IN AMALGAMATION TWO OR MORE COMPANIES ARE FUSED INTO O NE BY MERGER OR BY TAKING OVER BY ANOTHER. RECONSTRUCTION OR AMALGAMA TION HAS NO PRECISE LEGAL MEANING. THE AMALGAMATION IS A BLENDING OF TW O OR MORE 30 [2019] 260 TAXMAN 412 (DEL.) 31 (2019) 261 TAXMAN 137 (GUJ ) EXISTING UNDERTAKINGS INTO ONE UNDERTAKING, THE SHAREHOLDERS OF EACH BLENDING COMPANY BECOME SUBSTANTIALLY THE SHAREHOLDERS IN TH E COMPANY WHICH IS TO CARRY ON THE BLENDED UNDERTAKINGS. THERE MAY BE AMALGAMATION EITHER BY THE TRANSFER OF TWO OR MORE UNDERTAKINGS TO A NE W COMPANY, OR BY THE TRANSFER OF ONE OR MORE UNDERTAKINGS TO AN EXISTING COMPANY. STRICTLY AMALGAMATION DOES NOT COVER THE MERE ACQUISITION BY A COMPANY OF THE SHARE CAPITAL OF OTHER COMPANY WHICH REMAINS IN EXI STENCE AND CONTINUES ITS UNDERTAKING BUT THE CONTEXT IN WHICH THE TERM I S USED MAY SHOW THAT IT IS INTENDED TO INCLUDE SUCH AN ACQUISITION. SEE: HA LSBURY'S LAWS OF ENGLAND (4TH EDITION VOLUME 7 PARA 1539). TWO COMPA NIES MAY JOIN TO FORM A NEW COMPANY, BUT THERE MAY BE ABSORPTION OR BLENDING OF ONE BY THE OTHER, BOTH AMOUNT TO AMALGAMATION. WHEN TWO CO MPANIES ARE MERGED AND ARE SO JOINED, AS TO FORM A THIRD COMPANY OR ON E IS ABSORBED INTO ONE OR BLENDED WITH ANOTHER, THE AMALGAMATING COMPANY L OSES ITS ENTITY. (IV) FOURTHLY, UPON THE AMALGAMATING COMPANY CEASIN G TO EXIST, IT CANNOT BE REGARDED AS A PERSON UNDER SECTION 2(31) OF THE ACT 1961 AGAINST WHOM ASSESSMENT PROCEEDINGS CAN BE INITIATED OR AN ORDER OF ASSESSMENT PASSED; (V) FIFTHLY, A NOTICE UNDER SECTION 143 (2) WAS ISS UED ON 26 SEPTEMBER 2013 TO THE AMALGAMATING COMPANY, SPIL, WHICH WAS FOLLOW ED BY A NOTICE TO IT UNDER SECTION 142(1); (VI) SIXTHLY, PRIOR TO THE DATE ON WHICH THE JURISD ICTIONAL NOTICE UNDER SECTION 143 (2) WAS ISSUED, THE SCHEME OF AMALGAMATION HAD BEEN APPROVED ON 29 JANUARY 2013 BY THE HIGH COURT OF DELHI UNDER THE C OMPANIES ACT 1956 WITH EFFECT FROM 1 APRIL 2012; 10 ITA NO. 6587/DEL/2016 (VII) SEVENTHLY, THE ASSESSING OFFICER ASSUMED JURI SDICTION TO MAKE AN ASSESSMENT IN PURSUANCE OF THE NOTICE UNDER SECTION 143 (2). THE NOTICE WAS ISSUED IN THE NAME OF THE AMALGAMATING COMPANY IN S PITE OF THE FACT THAT ON 2 APRIL 2013, THE AMALGAMATED COMPANY MSIL HAD ADDRES SED A COMMUNICATION TO THE ASSESSING OFFICER INTIMATING T HE FACT OF AMALGAMATION. IN THE ABOVE CONSPECTUS OF THE FACTS, THE INITIATION O F ASSESSMENT PROCEEDINGS AGAINST AN ENTITY WHICH HAD CEASED TO EXIST WAS VOI D AB INITIO. IN THE PRESENT CASE ALSO THE AMALGAMATING COMPANY I .E. GENPACT INDIA WAS NOT IN EXISTENCE AT THE TIME OF CONDUCTING ASSESSME NT PROCEEDINGS AS WELL AS ON THE DATE OF PASSING ASSESSMENT ORDER. ONCE IT IS FOUND THAT ASSESSMENT IS FRAMED IN THE NAME OF NON-EXISTING ENTITY, IT DOES NOT REMAIN A PROCEDURAL IRREGULARITY OF THE NATURE WHICH COULD BE CURED BY INVOKING THE PROVISIONS OF SECTION 292B OF THE ACT. THUS, IN LIGHT OF THE DECISION OF THE MARUTI SUZUKI PASSED BY THE HONBLE APEX COURT IS RELEVANT IN THE PRESENT CASE AS WELL AND HENCE ADDITIONAL GROUND IS ALLOWED. HENCE, THE ASSE SSMENT ORDER ITSELF IS VOID AB INITIO. THEREFORE, ASSESSMENT ORDER IS SET ASID E. THERE IS NO NEED TO GIVE ANY FINDING RELATING TO THE MERITS OF THE CASE AS T HE ASSESSMENT ORDER ITSELF IS VOID AB INITIO. AND BAD IN LAW. THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 03RD D AY OF NOVEMBER, 2020 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 03/11/2020 R. NAHEED * 11 ITA NO. 6587/DEL/2016 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI