Logica Pvt. Ltd., (merged with CGI Information Systems and Management Consultants Pvt. Ltd.) V. Assistant Commissioner of Income-Tax, Circle-11(5) Bangalore and Principal Commissioner of Income Tax

ITA/1008/2017

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The case involves Logica Pvt. Ltd., which was merged with Logica Global Solutions Private Limited, and the subsequent tax assessment issues arising from this merger. The primary legal contention was whether the assessment order passed on the non-existent entity (LGSPL) was valid and whether the ITAT was correct in remitting the matter back for reassessment in the name of the amalgamated company despite the statutory time limit having expired. The High Court of Karnataka examined the procedural validity of the assessment and the application of legal principles concerning corporate mergers and tax assessments.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 798813 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 01-08-2022
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Central Circle, Bangalore Vs Intel Technology India (P) Ltd., Spice Entertainment Ltd. Vs Commissioner of Income Tax, Principal Commissioner of Income Tax Vs Maruti Suzuki India Ltd.
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: T SURYANARAYANA; TANMAYEE RAJKUMAR
• Keywords: Assessment Year 2006-2007; Dispute Resolution Panel; Income Tax; Income tax appellate tribunal; Merger
• Section: 143(2); 153; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF AUGUST, 2022 PRESENT THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR AND THE HON’BLE MRS. JUSTICE M.G. UMA I.T.A NO.1008/2017 BETWEEN: LOGICA PVT. LTD., (MERGED WITH CGI INFORMATION SYSTEMS AND MANAGEMENT CONSULTANTS PVT. LTD.,) ELECTRONIC CITY TOWER II, NO.95/1 AND 95/2, ELECTRONIC CITY PHASE I (WEST) BANGALORE - 560 100 REPRESENTED HEREIN BY ITS DIRECTOR MS. BABALUSHA ESTHER ALEXANDER. PAN NO. AAACL5372K .…APPELLANT (BY SRI: T. SURYANARAYANA, SENIOR COUNSEL FOR SMT: TANMAYEE RAJKUMAR, ADVOCATE) AND: 1. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-11(5) BANGALORE, (PRESENTLY DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2(1)(1), BANGALORE) BMTC BUILDING KORAMANGALA 6TH BLOCK BANGALORE - 560 085. 2. PRINCIPAL COMMISSIONER OF INCOME TAX BMTC BUILDING 2 KORAMANGALA 6TH BLOCK BANGALORE - 560 085. …RESPONDENTS (BY SRI: K.V. ARAVIND, ADVOCATE) THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 05.07.2017 PASSED IN IT(TP)A NO.1371/BANG/2010, FOR THE ASSESSMENT YEAR 2006- 2007, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE TRIBUNAL DATED 05.07.2017 PASSED IN IT(TP)A NO.1371/BANG/2010 (ANNEXURE-G) AND PASS SUCH OTHER OR SUITABLE ORDERS AS THIS HON'BLE COURT DEEMS FIT TO PASS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE AND EQUITY. THIS ITA COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT Heard Shri T Suryanarayana, learned senior advocate for the appellant-assessee and Shri K V Aravind, learned advocate for the Revenue. 2. Logica Global Solutions Private Limited (for short 'LGSPL') filed its returns for the assessment year 2006-07 on 30.11.2006. On 16.11.2007, LGSPL merged with a new Company named Logica Pvt. Ltd., (for short 'LPL'). The Assessing Officer passed draft assessment order on 16.12.2009. The LPL filed objections to the draft assessment 3 order before the Dispute Resolution Panel (for short 'DRP'). By its order dated 16.09.2010, the DRP rejected the objections filed by LPL and directed the Assessing Officer to compute the loss as per the draft assessment order. The Assessing Officer passed the assessment order on 23.09.2010 against LGSPL. The appellant challenged the said order before the Income Tax Appellate Tribunal (for short 'ITAT') in IT(TP)A No.1371/Bang/2010. The ITAT by its order dated 05.07.2017 partly allowed the appeal and directed the Assessing Officer to frame the assessment order in the hands of the amalgamated Company namely the assessee. Feeling aggrieved, the assessee has filed this appeal. 3. This Court admitted the appeal to consider the following substantial questions of law: \"(a) That the Hon'ble Tribunal was right in rejecting the Appellant's contention that the assessment order passed on LGSPL, which was non-existent as on the date of the order, was invalid, holding that at the time of issue of the notice under Section 143(2) of the Act, the amalgamating company was in existence, although the same is contrary to the decisions of 4 the jurisdictional High Court and various other High Courts? (b) That the Hon'ble Tribunal was justified in remitting the matter back to the file of the 1st respondent to pass fresh order on the amalgamated company despite the time limit for doing so in terms of Section 153 of the Act having expired?\" 4. Shri T Suryanarayana, for the assessee submitted that the point is settled. The proceedings against the non- existing Company are null and void. He placed reliance on Commissioner of Income Tax, Central Circle, Bangalore Vs Intel Technology India (P) Ltd., 1, Spice Entertainment Ltd., Vs Commissioner of Income Tax2 and Principal Commissioner of Income Tax Vs Maruti Suzuki India Ltd., 3 in support of his contention. 5. Shri K V Aravind, for the Revenue sought to distinguish the authority in Maruti Suzuki India Ltd., (supra), by adverting to para 33 of the judgment contending inter alia that though the intimation was given, the statutory notice 1 [2015] 57 taxmann.com 159 (Karnataka) 2 2012 (280) ELT 43 (Del.) 3 [2019] 107 taxmann.com 375 (SC) 5 under Section 143(2) of the Income Tax Act ('Act' for short) was issued in the name of amalgamating Company. Under such circumstance, the Court has passed order in that case. 6. We have carefully considered the rival contentions and perused the records. 7. The undisputed facts of this case are, information about amalgamation was brought to the notice of the Assessing Officer by communication dated 16.01.2009 and it has been acknowledged on 23.01.2009. The draft order has been passed by the Assessing Officer on 16.12.2009 i.e., 11 months after the intimation. The amalgamated Company has filed objection before the DRP. The ITAT allowing the appeal in part has directed to frame the assessment order in the name of amalgamated company. Thus, the fact remains that despite being brought to the notice, the Assessing Officer has passed the order in the name of amalgamating Company. 8. In Maruti Suzuki India Ltd., (supra), it is held that there is a value which the Court must abide by in promoting the interest of certainty in the tax litigation. We may record that the decision in C.I.T. New Delhi Vs M/s Spice 6 Enfotainment Ltd., 4 has been upheld dismissing the Civil Appeal filed by CIT. Similarly, the order passed by this Court in Intel Technology India (P) Ltd. (supra) was also challenged before the Hon'ble Apex Court and the same has also been dismissed in Civil Appeal No.6581 of 2015. 9. In view of the above, this appeal merits consideration and hence, the following: ORDER The appeal is allowed. The substantial questions of law are answered in favour of the assessee and against the revenue. Sd/- JUDGE Sd/- JUDGE *bgn/- 4 Civil Appeal No.285/2014 DD 02.11.2017 "