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Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI
Before: SHRI N. K. BILLAIYA & SHRI ANUBHAV SHARMA
O R D E R PER ANUBHAV SHARMA, J. M.: 1. These are the appeals filed by the assessee against the order of the ld AO, Circle-3(1)(1), Delhi (hereinafter referred as Ld. AO) dated 20.08.2022 for Assessment Year 2018-19 and dated 29.09.2021 for Assessment Year 2019-20.
ITA No. 1872 & 1873/Del/2022 John Wiley & Sons, Inc 2. There are stay application Nos. 358 & 359/Del/2022, in & 1873/Del/2022 for Assessment Year: 2018-19 & 2019-20.
Brief facts of the case are that the appellant before this Tribunal is John Wiley & Sons, Inc. and the successor in interest of the assessee M/s. Wiley Subscription Services Inc, which had filed its return of income declaring Nil income. The case of the assessee was selected for complete scrutiny. The dispute was with regard to receipts from Indian customers for sale of online journals and subscription license which the assessee company had claimed to be of subscription and not royalties FTS/ FIS as alleged by the revenue authorities.
Draft order was passed on 29.09.2021 mentioning that the assessee to be Wiley Subscription Services Inc with PAN AABCW0765G. The ld DRP passed the order in the name of M/s. John Wiley & Sons Inc. and the ld DRP in order dated 29.04.2022 specifically directed in para 2.1 as follows:- 2.1 In regard to the above Ground, it is seen that the AO has passed the draft assessment order in the name of 'Wiley Subscription Services Inc. (now known as John Wiley & Sons Inc.). Accordingly, the fact that John Wiley & Sons Inc., is successor to Wiley Subscription Services Inc. has been duly recognised by the AO. The AO shall pass the final assessment order as per the name given in these Directions. The Ground is dismissed.
The final order has been passed by the ld AO on 20.06.2022 on the same assessee M/s. Wiley Subscription Services Inc with PAN No. AABCW0765G.
Apart from the grounds on merits, the appellant in ground No. 2 and 3 has submitted:- “2. The assessee is a company incorporated under the laws of USA and is engaged in the business of providing access to online journals/ online library, containing Wiley Blackwell journals publication and distribution of WB Journals, online books, online research works etc. 3. During the year under consideration, assessee has stated that it has received an amount of Rs. 154,61,79,242/- from Indian customers for & 1873/Del/2022 John Wiley & Sons, Inc sale of online journals and subscription licenses. The assessee has claimed that such receipts of subscription revenues from customers for providing access to online journals/online library containing WB Journals publication and distribution of WB Journals, online books, online research works etc. do not qualify as Royalties or FTS/FIS under the Act as well as under India-USA DTAA and are accordingly not taxable in India.”
At the time of hearing on behalf of the appellant it was submitted the ld AO had passed the final order without complying with the directions of ld. DRP and the in the name of a non-existing entity. It was submitted that during the assessment proceedings the ld AO was specifically informed of all the facts that the assessee M/s. Wiley Subscription Services Inc has merged with M/s. John Wiley and Sons Inc and the copy of merger document was also submitted. Inspite of these facts being there with the ld AO has preferred to pass assessment order upon non existing entity. The ld AR relied on the following judgment in support of argument that such an order was passed on existing entities is void ab initio: i. PCIT v. Maruti Suzuki India Ltd., 416 ITR 613 (SC) ii. Spice Entertainment Ltd. v. CIT, dated 03.08.2011 (DHC) iii. PCIT v. Transcent MT Services (P.) Ltd. [2019] 109 taxmann.com 421 (DHC) iv. CIT, Bangalore v. Intel Technology India (P.) Ltd. [2015] 9557 taxmann.com 159 (Kar.) v. Teleperformance Global Services (P.) Ltd Vs. ACIT, [2021] 127 taxmann.com 46 (Bom.) vi. DCIT Vs. NDC Telecommunication India Pvt. Ltd., ITA No. 3011/Del/2015 dated 16.10.2018 (ITAT-Delhi) vii. Genpact India (P.) Ltd. Vs. DCIT, [2020] 118 taxmann.com 40 (ITAT-Delhi) viii. M/s Nahar Enterprises Vs. DCIT, ITA No. 2853 to 2855/Mum/2017 & ITA No. 3572 to 3574/Mum/2015 dated 07.04.2017 (ITAT- Delhi) ix. ACIT Vs. M/s. Neha Enterprises, ITA No. 3666/Mum/2015 & CO No. 249/Mum/2017 dated 20.12.2017 ITA No. 1872 & 1873/Del/2022 John Wiley & Sons, Inc x. Vertex Customer Management India Pvt. Ltd. Vs. DCIT, ITA No. 966/Del/2016 dated 06.07.2018 (ITAT-Delhi) xi. BOEING India Pvt. Ltd Vs. ACIT, ITA No. 9765/Del/2018 xii. Value First Digital Media Pvt. Ltd Vs. ACIT, ITA No. 2183/Del/2018 dated 02.05.2019 (ITAT- Delhi) xiii. Nokia Solutions & Networks India Pvt. Ltd Vs. DCIT, ITA No. 3169/Del/2016 dated 31.05.2017 (ITAT-Delhi) xiv. ACIT Vs. Sarla Fabrics Pvt. Ltd, ITA No. 4311/Del/2016 dated 17.02.2021 (ITAT-Delhi) xv. CIT Vs. Spice Enfotainment limited Civil Appeal 285 of 2014 (SC) xvi. Dhingra Jardina Infrastructure Private Limited Vs. State of Haryana and others CWP 20788 OF 2015 (Punjab and Haryana High Court) xvii. CIT Vs. Dimensions Appareals Pvt. Ltd [2015] 370 ITR 288 (Delhi High Court) xviii. PCIT Vs. Maruti Suzuki India Ltd, [2017] 397 ITR 681 (Delhi High Court) High xix. CIT Vs. Miera India Pvt. Ltd., ITA 441 of 2013 (Delhi Court) xx. Flextronics Technologies (India) Pvt. Ltd. v. ACIT [IT(TP)A No. 832/Bang/2017) xxi. Ebro India Pvt. Ltd v. ACIT [S.A. No. 158/Del/2022] xxii. Biocon Biologics Ltd. v. DCIT [IT(TP)A No. 299/Bang/2022] xxiii. Marlabs Innovations (P.) Ltd v. DCIT [2022] 196 ITD 179 (Bangalore- Trib.)
The ld DR however defended the orders qua this ground submitting that the assessee has remedy to get the assessment order rectified and it is not a sufficient ground to set aside assessment.
Giving thoughtful consideration to the matter on record the bench is of considered opinion that there is no force in the contention of the ld DR that as rectification powers are available with ld AO the assessee should preferably get the order rectified when the assessee has more efficacious remedy in the form of challenging the assessment order itself being void ab initio, available. & 1873/Del/2022 John Wiley & Sons, Inc 10. Then it can be appreciated that vide letter dated 18.12.2020 available at page No. 1 of the paper book the ld AO was specifically informed of the fact of merger of the assessee M/s. Wiley Subscription Services Inc with appellant M/s. John Wiley & Sons Inc. Further, by letter dated 23.03.2021 the ld AO was specifically informed, upon his own questionnaire, about the date of merger and the fact that the successor company John Wiley & Sons Inc already holds PAN No. AACCJ5564B. Inspite of the aforesaid facts being in the knowledge of the AO and the specific directions of the ld DRP as reproduced above, the AO preferred to pass the assessment order upon the predecessor of appellant which no longer existed and upon the PAN account of the predecessor of the appellant. Catena of judgments cited by the ld AR firmly hold that the assessment orders passed on non existing entities are void. The observations of Hon'ble Supreme Court judgment in cased of Pr. CIT v. Maruti Suzuki India Ltd. (2019) 416 ITR 613 (SC) are worth mentioning wherein Hon'ble Supreme Court has held as under:- “33 In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment. 34 We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable.” Page | 5