DCIT, Circle-1(2), Hyd, Hyderabad V. BA Continuum India P. Ltd., Hyd, Hyderabad

ITA 932/HYD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2577 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Condonation of delay
• Section: 143(3); 142(1); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 932/HYD/2015 ASSESSMENT YEAR: 2009-10 DCIT, CIRCLE-1(2), HYDERABAD. VS. M/S B.A. CONTINUUM INDIA PRIVATE LIMITED, HYDERABAD. PAN AAECM0854D (APPELLANT) (RESPONDENT) C.O NO. 48/HYD/2015 (IN ITA NO.932/HYD/2015 ASSESSMENT YEAR: 2009-10) M/S B.A. CONTINUUM INDIA PRIVATE LIMITED, HYDERABAD. PAN AAECM0854D VS. DCIT, CIRCLE-1(2), HYDERABAD. (APPELLANT) (RESPONDENT) REVENUE BY ASSESSEE BY SHRI P. CHANDRA SEKHAR SHRI SAMPATH RAGHUNATHAN DATE OF HEARING DATE OF PRONOUNCEMENT 22-06-2017 22-09-2017 ORDER PER P. MADHAVI DEVI, J.M.: THE APPEAL IS FILED BY THE REVENUE WHILE THE CROSS OBJECTION IS FILED BY THE ASSESSEE FOR THE A.Y 2009-10 AGAINST THE ORDER OF CIT(A)-55, MUMBAI DATED 27.02.2015. 2. AT THE OUTSET, IT IS NOTICED THAT THE REVENUES APPEAL IS BARRED BY A PERIOD OF 12 DAYS. THE REVENUE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY STATING THAT THE DELAY 2 ITA NO. 932/HYD/2015 M/S. BA CONTINUUM INDIA PVT LTD. HYD. HAS OCCURRED DUE TO THE DELAY IN OBTAINING THE RECORDS OF THE CASE INCLUDING THE GROUNDS OF APPEAL FILED BY THE ASSESSEE COMPANY BEFORE THE CIT(A)-55, MUMBAI. TAKING THE SAME INTO CONSIDERATION AND BEING SATISFIED WITH THE REASONS GIVEN IN THE APPLICATION, WE CONDONE THE DELAY OF 12 DAYS AND PROCEED TO DISPOSE OF THE APPEAL AS UNDER. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY PREVIOUSLY KNOWN AS MERRILL LYNCH INDIA TECHNOLOGY SERVICES PVT. LTD. FILED ITS RETURN OF INCOME FOR THE A.Y 2009-10 ON 27.09.2009. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE IT ACT, THE A.O OBSERVED THAT THE ASSESSEE HAD ENTERED INTO VARIOUS INTERNATIONAL TRANSACTIONS WITH ITS AES. THEREFORE THE DETERMINATION OF THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS WAS REFERRED TO THE TPO U/S 92 CA OF THE ACT. IN THE MEANTIME, THE ASSESSEE HAD AMALGAMATED WITH M/S B.A. CONTINUUM INDIA PRIVATE LIMITED W.E.F 01.04.1999 IN ACCORDANCE WITH THE DIRECTIONS OF THE HONBLE HIGH COURT OF ANDHRA PRADESH AND BOMBAY AND THE SAME WAS INTIMATED TO THE A.O. VIDE ORDERS DATED 29.01.2013, THE TPO PROPOSED AN ADJUSTMENT TOWARDS ITES SERVICES RENDERED BY THE ASSESSEE TO ITS AES. IN ACCORDANCE WITH THE SAME, THE A.O PROPOSED A DRAFT ASSESSMENT ORDER. THE ASSESSEE, VIDE LETTER DATED 07.03.2013, SUBMITTED BEFORE THE A.O, THAT IT WISHES TO EXERCISE OPTION OF FILING AN APPEAL BEFORE THE CIT(A) AND NOT PROCEED BEFORE THE DRP. TAKING THE SAME INTO CONSIDERATION, THE A.O PASSED THE FINAL ASSESSMENT ORDER, AGAINST WHICH, THE ASSESSEE PREFERRED ITS APPEAL BEFORE THE CIT(A) WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE 3 ITA NO. 932/HYD/2015 M/S. BA CONTINUUM INDIA PVT LTD. HYD. I.E HE HAS HELD THE ASSESSMENT IN THE NAME OF THE AMALGAMATING NON-EXISTING COMPANY AS NOT SUSTAINABLE. AS REGARDS THE OTHER GROUNDS OF THE APPEAL, HE REFUSED TO ADJUDICATE THE SAME AND TREATED THEM AS DISMISSED. AGAINST THE RELIEF GRANTED BY THE CIT(A), REVENUE IS IN APPEAL BEFORE US WHILE THE ASSESSEE IS IN CROSS OBJECTION SEEKING DIRECTION TO THE CIT(A) TO ADJUDICATE THE OTHER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN ITS APPEAL BEFORE THE CIT(A). 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT FACTS IN THE CASE OF M/S. SARASWATI INDUSTRIAL SYNDICATE LTD ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE; 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN RULING THAT THE AMALGAMATING COMPANY IS NON-EXISTENT AS ON THE DATE OF PASSING OF THE ASSESSMENT ORDER WITHOUT APPRECIATING THE FACT THAT THE ORDER PERTAINS TO F.Y 2008-09 AND THE AMALGAMATION TOOK EFFECT FROM 01-04-2009. 5. ACCORDING TO THE LD. DR, THE ASSESSEE COMPANY GOT MERGED WITH M/S B.A. CONTINUUM INDIA PRIVATE LIMITED ONLY W.E.F 01.04.2009 AND THEREFORE IT EXISTED DURING THE RELEVANT FY 2008-09, AND HAS EVEN FILED THE RETURN OF INCOME IN ITS ORIGINAL NAME ONLY. HE SUBMITTED THAT THE NOTICES U/S 142(1) AND 143(2) OF THE IT ACTS WERE ISSUED TO THE ASSESSEE ON 19.08.2010 ON WHICH DATE, THE AMALGAMATION HAS NOT YET BEEN ORDERED. THEREAFTER, ACCORDING TO HIM, THE DEFECTS, IF ANY, IN ISSUANCE OF NOTICES IN THE NAME OF THE AMALGAMATING COMPANY, ARE CURABLE DEFECTS AND THEREFORE THE ASSESSMENT SHOULD NOT BE 4 ITA NO. 932/HYD/2015 M/S. BA CONTINUUM INDIA PVT LTD. HYD. NULLIFIED BUT SHOULD BE SET ASIDE TO THE FILE OF THE A.O FOR RE-ASSESSMENT. HE ALSO DREW OUR ATTENTION TO PROVISIONS OF SECTION 292(BB) OF THE IT ACT TO SUBMIT THAT THE RETURN OF INCOME OR ASSESSMENT OR NOTICE OR SUMMONS ARE NOT INVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOME OR ASSESSMENT OR NOTICE OR SUMMONS. HE SUBMITTED THE ASSESSEE HAS, THROUGHOUT, PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND THEREFORE IT CANNOT NOW TURN BACK TO SAY THAT THE ASSESSMENT PROCEEDINGS ARE INVALID. 6. THUS, ACCORDING TO THE LD. DR, THE FINDING OF THE CIT(A) THAT THE ASSESSMENT ON A NON-EXISTING COMPANY IS INVALID IS NOT SUSTAINABLE. FURTHER THE LD. DR HAS DRAWN OUR ATTENTION TO BOTH THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE CIT(A) TO DEMONSTRATE THAT THEY ARE PASSED IN THE NAME OF THE AMALGAMATED COMPANY ONLY AND THE ONLY REFERENCE IF ANY TO THE AMALGAMATING COMPANY IS THE PAN NO. AND THAT TOO FOR THE PURPOSE OF IDENTIFYING THE AMALGAMATING COMPANY FROM THE AMALGAMATED COMPANY. AND THEREFORE, ACCORDING TO HIM, THERE IS NO PREJUDICE CAUSED TO THE ASSESSEE BY SUCH AN ASSESSMENT ORDER. 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE CIT(A) AND ALSO PLACED RELIANCE UPON VARIOUS JUDICIAL PRECEDENTS ON THE ISSUE. HE HAS ALSO DRAWN OUR ATTENTION TO THE LETTERS WRITTEN BY THE ASSESSEE TO THE A.O AS WELL AS CIT INTIMATING THE FACTUM OF AMALGAMATION AND NONEXISTENCE OF THE ASSESSEE COMPANY POST-MERGER. HE ALSO DREW OUR ATTENTION TO THE TP ORDER 5 ITA NO. 932/HYD/2015 M/S. BA CONTINUUM INDIA PVT LTD. HYD. DATED 29.01.2013, WHICH IS IN THE NAME OF THE AMALGAMATING COMPANY. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL PLACED ON RECORD, WE FIND THAT THE RELEVANT FINANCIAL YEAR BEFORE US IS 2008-09 AND THE ASSESSMENT YEAR IS 2009-10. THE ASSESSEE M/S MERRILL LYNCH INDIA TECHNOLOGY SERVICES PRIVATE LIMITED, FILED ITS RETURN OF INCOME ON 27-09-2009, WHILE NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 19-08-2010. THE A.O MADE A REFERENCE TO THE TPO UNDER SECTION 92 OF THE IT ACT FOR DETERMINATION OF THE ALP OF THE INTERNATIONAL TRANSACTION ON 16-08-2011 AND THE TPO ISSUED FRESH NOTICES U/S 142(1) AND 143(2) ON 07- 09-2012 AND 17-12-2012 RESPECTIVELY. THE TPO PASSED THE ORDER ON 29-01-2013, AND THE DRAFT ASSESSMENT ORDER IS PASSED ON 18-02.2013. ON PERUSAL OF ALL THE ABOVE FACTS, IT IS NOTICED THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME IN ITS NAME WITH PAN NO. AAECM0854D, SINCE IT HAD NOT YET MERGED WITH M/S B.A. CONTINUUM INDIA PRIVATE LIMITED TILL SUCH DATE. BUT, AS SOON AS THE MERGER HAS BEEN APPROVED BY THE RESPECTIVE HIGH COURTS ON20-08-2011 AND 14-10-2011 RESPECTIVELY, IT FILED NECESSARY APPLICATIONS BEFORE THE MINISTRY OF CORPORATE AFFAIRS TO GIVE EFFECT TO THE ORDER OF AMALGAMATION AND ALSO FILED LETTERS INTIMATING THE ISSUE OF MERGER TO THE A.O OF M/S B.A. CONTINUUM INDIA PRIVATE LIMITED (AMALGAMATED COMPANY) AS WELL AS THE CIT. THE PAN NUMBER OF THE ASSESSEE AS MENTIONED IN THE ABOVE LETTERS IS ALSO THAT OF MERRILL LYNCH INDIA TECHNOLOGY SERVICES PVT. LTD. AFTER MERGER, THE NAME OF THE COMPANY HAS BEEN CHANGED TO M/S B.A. CONTINUUM INDIA PRIVATE 6 ITA NO. 932/HYD/2015 M/S. BA CONTINUUM INDIA PVT LTD. HYD. LIMITED BUT WITH THE PAN NO. AAECM0854D. HOWEVER, THE A.O ISSUED NOTICES ON 17-11-2012 TO THE ASSESSEE IN ITS OLD NAME, IN RESPONSE TO WHICH, THE ASSESSEE, VIDE LETTER DATED 24-12-2012, DESCRIBING ITSELF AS M/S B.A. CONTINUUM INDIA PRIVATE LIMITED, ALSO BOUGHT TO HIS NOTICE THAT ITS PAN NO. AAECM0854D HAS BEEN SURRENDERED POST-MERGER WITH M/S B.A. CONTINUUM INDIA PRIVATE LIMITED. THE PAN NO. OF M/S B.A. CONTINUUM INDIA PRIVATE LIMITED-AACCC2310C WAS ALSO GIVEN. IN SPITE OF ALL THESE COMMUNICATIONS, THE TPO HAS STILL PASSED THE TP ORDER IN THE NAME OF M/S MERRILL LYNCH INDIA TECHNOLOGY SERVICES PVT LTD WITH PAN NO. AAECM0854D, BUT THE DRAFT AS WELL AS FINAL ASSESSMENT ORDERS HAVE BEEN PASSED IN THE NAME OF THE AMALGAMATED COMPANY. FORM NO. 35 IS ALSO FILED IN THE NAME OF THE AMALGAMATED COMPANY WITH THE PAN NO. AACCC2310C AND A SPECIFIC GROUND ABOUT PASSING OF ASSESSMENT ORDER IN THE NAME OF MERRILL LYNCH INDIA TECHNOLOGY SERVICES PVT. LTD., A NON-EXISTING ENTITY WAS TAKEN. THE CIT(A), HAS THEREFORE, HELD THAT THE ASSESSMENT IN THE NAME OF A NON-EXISTING COMPANY IS NOT SUSTAINABLE AND DID NOT DEAL WITH THE ISSUE ON MERITS. WE FIND THAT SIMILAR ISSUE WAS RAISED IN THE CASE OF CFC INDIA SERVICES PVT. LTD., IN THE A.Y 2008-09, WHICH HAD MERGED WITH M/S B.A. CONTINUUM INDIA PRIVATE LIMITED W.E.F 01-04-2008 AND THE ASSESSMENT ORDER WAS PASSED IN THE NAME OF THE AMALGAMATED COMPANY, BUT WITH THE PAN NO. OF THE MERGED COMPANY. WHEN SIMILAR OBJECTION WAS RAISED BY THE ASSESSEE IN THE SAID APPEAL, IT WAS NOT ACCEPTED BY THE CIT(A) AND ON SECOND APPEAL TO THE TRIBUNAL, THIS BENCH, AFTER CONSIDERING THE PRECEDENTS RELIED UPON BY THE ASSESSEE BEFORE US IN THE CASE BEFORE US, 7 ITA NO. 932/HYD/2015 M/S. BA CONTINUUM INDIA PVT LTD. HYD. VIDE ORDERS DATED 28-04-2017 (TO WHICH BOTH OF US ARE SIGNATORIES) HAS HELD AS UNDER: 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSMENT FOR THE A.Y. 2008-09 IN RESPECT OF THE AMALGAMATING COMPANY AND ALSO THE AMALGAMATED COMPANIES HAVE BEEN COMPLETED SEPARATELY, BUT IN THE NAME OF THE AMALGAMATING COMPANY ONLY. THE ONLY DIFFERENCE IS IN THE PAN NOS. MENTIONED IN THE ASSESSMENT YEARS. AS RIGHTLY HELD BY THE CIT(A), THE AMALGAMATING COMPANY WAS IN EXISTENCE FOR THE A.Y 2008-09, THOUGH BY THE TIME OF THE ASSESSMENT, IT HAD AMALGAMATED WITH THE AMALGAMATED COMPANY. ON BRINGING THE FACTUM OF AMALGAMATION TO THE NOTICE OF THE AO, THE CASE HAS BEEN TRANSFERRED TO THE JURISDICTION OF THE AO UNDER WHOM, THE AMALGAMATED COMPANYS REGISTERED OFFICE WAS LOCATED AND THE ASSESSMENT IS ALSO MADE IN THE NAME OF THE AMALGAMATED COMPANY. THE MENTION OF THE PAN NO. OF THE AMALGAMATING COMPANY IS ONLY TO DIFFERENTIATE BETWEEN THE AMALGAMATED AND AMALGAMATING COMPANIES. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND THE ASSESSEES GROUND OF APPEAL NO.1 IS THUS REJECTED. 9. IN THE CASE BEFORE US ALSO, THE ASSESSMENT ORDER HAS BEEN PASSED BY THE A.O, MUMBAI, HAVING JURISDICTION OVER THE AMALGAMATED COMPANY AND THE MENTION OF THE PAN NO. OF THE MERGED COMPANY IS ONLY TO DIFFERENTIATE BETWEEN THE AMALGAMATED AND AMALGAMATING COMPANIES FOR THE PERIOD WHEN BOTH OF THEM WERE IN EXISTENCE. THEREFORE, WE ARE NOT IN AGREEMENT WITH THE ORDER OF THE CIT(A) THAT THE ASSESSMENT HAS BEEN DONE IN THE NAME OF A NON-EXISTING COMPANY. THEREFORE, WE SET IT ASIDE. THE REVENUES APPEAL IS ACCORDINGLY ALLOWED. 10. SINCE, THE ASSESSMENT HAS BEEN REVIVED, THE CIT(A) IS DIRECTED TO ADJUDICATE THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON MERITS OF THE ADDITIONS MADE BY THE A.O. THUS 8 ITA NO. 932/HYD/2015 M/S. BA CONTINUUM INDIA PVT LTD. HYD. THE CROSS OBJECTION OF THE ASSESSEE IS ALSO TREATED AS ALLOWED. 11. IN THE RESULT, BOTH THE REVENUES APPEAL AND THE ASSESSEES C.O ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2017. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 22 ND SEPTEMBER , 2017. KRK 1 M/S. B.A. CONTINUUM INDIA PVT. LTD., BUILDING NO. 5, MIND SPACE RAHEJA IT PARK, HI-TECH CITY, MADHAPUR, HYDERABAD. 2 DY. CIT, CIRCLE-1(2), HYDERABAD. 3 CIT(A)-55, MUMBAI. 4 THE COMMISSIONER OF INCOME TAX, MUMBAI. 5 THE DR, ITAT HYDERABAD 6 GUARD FILE