×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
These appeals in ITA No.5709/Mum/2017 & 5623/Mum/2017 and Cross Objection No.310/Mum/2018 for A.Y.2012-13 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-14, Mumbai in appeal No.CIT(A)-14/IT-10545/15-16 dated 28/06/2017 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 31/03/2015 by the ld. Asst. Commissioner of Income Tax- 6(2)(1), Mumbai (hereinafter referred to as ld. AO).
2. We find that the assessee apart from raising the original grounds, had also raised the following additional grounds before us.
1. Whether on facts and circumstances of the case and in law, the assessment order under section 143(3) ought to be held to be bad in law, since on the date the assessment was framed, the company was non-existent having merged with Sprit Textile Pvt. Ltd. w.e.f. 01.10.2012.
2. Whether on facts and circumstances of the case and in law, the entire disallowance under section 14A of the Income-tax Act (hereinafter referred to as "the Act") read with Rule 8D of the Incometax Rules, 1962 (hereinafter referred to as "the Rules") ought to be deleted?‖
3. We have heard the rival submissions. We find that additional ground No.1 raised by the assessee is purely legal in nature and it goes to the root of the matter and it does not involve investigation of fresh facts. Hence, placing reliance on the decision of Supreme Court decision on Jute Corporation of India v. CIT  187 ITR 688 (SC) and NTPC Ltd., reported in 229 ITR 383, we are inclined to admit the additional grounds raised by the assessee and cons der the same for adjudication. Return of income was filed by the assessee for he A.Y.2012-13 on 27/09/2012 declaring total loss of Rs.36,53,03,148/-. The assessee is a registered NBFC and mainly involved in the business of investment, trading in shares and securities, promotion of companies and to have financial and equity participation in various fields, temporary lending of funds available with or without interest, with a view to have a commercial expediency or to have a business strategic interest in the borrowing companies. We find that this company i.e. Churu Trading Company Pvt. Ltd. was amalgamated and got merged with Sprit Textiles Pvt. Ltd., with appointed date effective from 01/10/2012 pursuant to the scheme of arrangement approved by the Hon’ble Bombay High Court vide its order dated 08/03/2013 which is enclosed in page 81 of the paper book filed before us. We also find that assessee had duly intimated this fact of merger with Sprit Textiles Pvt. Ltd., before the ld. AO vide letter dated 20/03/2015 wherein it had been categorically mentioned as under:-
―We submit that the company/ had ceased to be in existence since it was amalgamated and got merged into Sprit Textiles P Ltd., (STTL) w.e.f the year 2011-12 in terms of the approval of the Scheme of Arrangement as approved by the Hon'ble Bombay High Court, copy of the said order is enclosed with one of the issues raised hereunder. Therefore, the said company had ceased to exist and has become a part of STPL‖
3.1. Alongwith this letter, the assessee had also submitted various details that were called for by the ld. AO on 35 issues, which are not reiterated for the sake of brevity herein. We find that the ld. AO vide letter dated 23/03/2015 addressed to the Principal Officer of Churu Trading Company Pvt Ltd., had taken cognizance of the fact of amalgamation with Sprit Textiles Pvt. Ltd. by referring the letter dated 20/03/2015 supra of the assessee, had expressed his inability to grant further time to the assessee for furnishing of balance details that were originally called for by him. This letter dated 23/03/2015 addressed by the ld. AO to the amalgamating company i.e. Churu Trading Company Pvt. Ltd., clearly goes to prove that the ld. AO was conscious of the fact of merger of Churu Trading Company Pvt. Ltd., with Sprit Textiles Pvt. Ltd., Despite this, the ld. AO proceeded to frame the assessment u/s.143(3) of the Act on 31/03/2015 in the name of amalgamating company i.e. Churu Trading Company Pvt. Ltd. determining the total income of assessee at Rs.376,56,43,090/-. The appeal was preferred before the ld. CIT(A) wherein the cause title was clearly mentioned as Churu Trading Company Pvt. Ltd., (Now merged with Sprit Textiles Pvt. Ltd.). However, we find that assessee had not challenged this jurisidictional issue of framing of assessment on a non-existent company by the ld. AO in the grounds of appeal raised before the ld. CIT(A). From the perusal of the appellate order, we also find that no additional ground was even raised by the assessee before the ld. CIT(A) in this regard. Even in the original grounds of appeal, the assessee had not raised this preliminary legal issue before us. This ground has been raised vide additional ground No.1 before us wherein the assessee seeks to challenge the validity of assessment framed by the ld. AO on a non-existent company. We have already held hereinabove that the additional ground raised in this regard by the assessee goes to the root of the matter and does not involve fresh investigation of facts and accordingly the same is admitted for adjudication.
3.2. Now, the short point that arises for our consideration is that whether the assessment could be validly framed on a non-existent company by the ld. AO. It is not in dispute that assessee had duly intimated the fact of merger with Sprit Textiles Pvt. Ltd., to the ld. AO vide its letter dated 20/03/2015 referred supra. It is not in dispute that the ld. AO had taken due cognizance of fact of merger by addressing a