CAPGEMINI TECHNOLOGY SEVICES INDIA LTD(AS SUCCESSOR-IN INTEREST OF ERSTWHILE ARICENT TECHNOLOGIES PVT LTD SINCE AMALGAMATED,PUNE vs. ASSISTANT COMMISSIONER OF INCOME TAX-1(1), PUNE, PUNE

Facts of the case, in brief, are that the assessee company M/s. Aricent Technologies Pvt. Ltd. filed its original return of income on 12.02.2021 declaring total income of Rs.15,02,31,070/- as per normal computation and book profit u/s 115JB of the Act of Rs.13,22,05,404/-. Since the assessee had entered into certain international transactions, the Assessing Officer referred the matter to the Transfer Pricing Officer (TPO) for determining the arm's length price of the same. The TPO vide order dated 24.07.2023 proposed an upward adjustment of Rs.228,66,345/-. The Assessing Officer in the draft assessment order made addition of the same.

The assessee approached the Dispute Resolution Panel (DRP) who vide order dated 18.06.2024 gave part relief to the assessee.

Aggrieved with such order of the Assessing Officer / TPO / DRP, the assessee is in appeal before the Tribunal by raising the following grounds:

The Ld. Counsel for the assessee at the outset drew the attention of the Bench to the draft order passed u/s 144(1) dated 26.09.2023 where the Assessing Officer has mentioned as under: “The assessee company, M/s Aricent Technologies Pvt. Ltd. (PAN: AACCT2194F) (the transferor company) has amalgamated with Aricent Technologies (Holdings) Limited (the transferee company) w.e.f. 1st April 2020 pursuant to the scheme of arrangement in accordance with the provision of section 233 of the Companies Act, 2013 before the Registrar of Companies ('ROC') and approved by the Regional Director vide order dtd 21.12 2020 (NO.233/135/T-2/2020/7534). Further, Aricent Technologies (Holdings) Limited has amalgamated with Capgemini Technology Services India Limited (PAN: AABCM4573E) vide Hon National Company Law Tribunal, Mumbai Bench, Court-II order dtd.23.12.2022 w.e.f. 01.10.2021.”

Referring to the order of the TPO dated 24.07.2023, he drew the attention of the Bench to the same and submitted that the TPO has passed the order in the name of Aricent Technologies Pvt. Ltd. by which date the company has already merged with Capgemini Technology Services India Pvt. Ltd. He submitted that this fact was admitted by the Assessing Officer in the draft assessment order. Referring to page 3 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the letter dated 11.04.2022 addressed to the DCIT (Transfer Pricing) wherein it was categorically mentioned that the jurisdictional notice issued in the name of Aricent Technologies Pvt. Ltd. is invalid for the details given therein. Referring to page 26 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the notice dated 26.08.2022 issued by the Assessing Officer to the assessee company wherein he has mentioned the name of the assessee as Aricent Technologies Pvt. Ltd. despite the fact that the said company has already been merged with Capgemini Technology Services India Pvt. Ltd. Referring to page 29 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the reply dated 10.01.2023 by the assessee to the Assessing Officer wherein the assessee has requested the TPO to drop the proceedings since the same have been initiated in the name of non-existing company and non-existing PAN. Referring to page 32 of the paper book, he submitted that the notice issued by the Assessing Officer dated 27.2.2023 to the assessee wherein he has again issued the notice in the name of Aricent Technologies Pvt. Ltd. Referring to page 33 of the paper book, he drew the attention of the Bench to the letter dated 15.03.2023 by the assessee to the Assessing Officer wherein it was again requested to drop the proceedings which have been initiated in the name / PAN of a non-existing company. Referring to page 35 of the paper book, he drew the attention of the Bench to the letter addressed to the Assessing Officer on 06.07.2023 wherein it was specifically brought to the notice of the Assessing Officer that Aricent Technologies Pvt. Ltd. has already amalgamated into Capgemini Technology Services India Pvt. Ltd.

Referring to the draft order u/s 144(1) dated 26.09.2023, he submitted that the Assessing Officer for the first time has mentioned the correct name i.e. Capgemini Technology Services India Pvt. Ltd. He submitted that the TPO is not given any concession under the Act to pass any order as per his choice. Once the TPO fails to do it, the entire addition is invalid and therefore, the upward adjustment of Rs.228,66,345/- which has been reduced to Rs.136,28,185/- by the DRP being not in accordance with law has to be quashed.

Referring to the decision of the Ahmedabad Bench of the Tribunal in the case of M/s. Allscripts (India) LLP (As a successor in interest of Allcripts India Pvt. Ltd.) vs. NFAC vide order dated 08.05.2023, he submitted that the Tribunal in the said decision has deleted the TP adjustment on the ground that the TPO has passed the order on a non-existing entity.

Referring to the decision of the Delhi Bench of the Tribunal in the case of Honda Cars India Ltd. vs. DCIT (2022) 139 taxmann.com 579 (Delhi – Trib.), he submitted that the Tribunal in the said decision has held that where in spite of intimation to TPO and Assessing Officer regarding amalgamation of a company named ‘HM’ with assessee-company, order under section 92CA(3) and final assessment order was passed in name of amalgamated company, final assessment order, having been passed in name of an entity which after amalgamation was not in existence, was invalid in eyes of law. He accordingly submitted that the order passed by the TPO being not in accordance with law, the upward adjustment determined by him has to be quashed.

The Ld. DR on the other hand submitted that the Assessing Officer in the final assessment order has passed the order in the name of correct assessee, therefore, merely because the TPO has passed the order in the name of erstwhile company, the same cannot be treated as invalid. Further, the DRP has also passed the order in the name of the amalgamated company. He accordingly submitted that the additional ground raised by the assessee should be dismissed.

Referring to the decision of the Hon’ble Madras High Court in the case of CIT vs. T.V. Sundaram Iyengar & Sons (P.) Ltd. (1999) 238 ITR 328 (Mad.), he submitted that it is not open to amalgamated company which has taken over all assets and liabilities of the amalgamating company to claim that it is not in any way liable for tax payable by amalgamating company, even though order u/s 104 came to be made after order of amalgamation and after dissolution of amalgamating company.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer / TPO / DRP and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case has filed the return in the name of Aricent Technologies Pvt. Ltd. The only question that has to be decided in the instant appeal is as to whether the order passed by the TPO in the name of a non-existing company is a valid one or not. We find the TPO in the instant case has passed the order on 24.07.2023. We find from page 3 of the paper book that the assessee vide its letter dated 11.04.2022 addressed to the TPO has mentioned as under: “B. Notice issued in the name of non-existing company – Invalid In this regard, it is respectfully submitted that since the appointed date of merger of ATPL and ATHL, as laid down in the approved scheme is 1 April 2020, ATPL has legally ceased to exist from the said date.”

Relying on various decisions it was submitted that the reference made by the Assessing Officer and issuance of captioned notice thereof in the name and against the PAN of ATPL (a non-existent entity) is bad / invalid in law and viod-ab-initio.

We find from page 26 of the paper book that the TPO again issued notice in the name of Aricent Technologies Pvt. Ltd. on 26.08.2022 to which the assessee vide its reply dated 10.01.2023 has again requested the TPO to drop the proceedings on the ground that the same have been initiated in the name of PAN of a non-existing company. The relevant reply of the assessee reads as under: “We request your office to drop the captioned proceedings as the same have been initiated in the name/ PAN of a non-existing company as elaborated in our earlier submissions. Strictly without prejudice to above, for the purpose of making compliance (under protest) with the captioned notice, the assessee hereby, as successor of ATPL, submits the following documents further to our submission dated 11 April 2022.”

We find again the TPO vide notice dated 27.02.2023 issued to Aricent Technologies Pvt. Ltd. asking for certain details to which the assessee vide reply dated 15.03.2023 again requested the Assessing Officer to drop the proceedings on the ground that the same have been initiated in the name / PAN of non-existing company. The relevant reply of the assessee at page 33 of the paper book reads as under: “We request your office to drop the captioned proceedings as the same have been initiated in the name/ PAN of a non-existing company as elaborated in our earlier submissions. Strictly without prejudice to above, for the purpose of making compliance (under protest) with the captioned notice, the assessee hereby, as successor of ATPL, submits the following documents…”

We find again the assessee vide letter dated 06.07.2023 addressed to the TPO requested to drop the proceedings on the ground that the same have been initiated in the name / PAN of non-existing company, the details of which are as under: “We request your office to drop the captioned proceedings as the same have been initiated in the name/ PAN of a non-existing company as elaborated in our earlier submissions. Strictly without prejudice to above, for the purpose of making compliance (under protest) with the captioned notice, the assessee hereby, as successor of ATPL submits the following for your favourable consideration:….”

We find despite all these letters to the TPO, he passed the order in the name of Aricent Technologies Pvt. Ltd. vide order dated 24.07.2023. Under these circumstances, we have to see as to whether the order of the TPO passed in the name of a non-existing company is a valid one and therefore such upward adjustment proposed by the TPO can be sustained.

We find an identical issue had come up before the Ahmedabad Bench of the Tribunal in the case of M/s. Allscripts (India) LLP (As a successor in interest of Allcripts India Pvt. Ltd.) vs. NFAC (supra) wherein the Tribunal while deciding the issue of validity of the order passed by the TPO on a non-existing company. The Tribunal after relying on the various decisions held that the order passed on a non-existing company is a nullity. The relevant observations of the Tribunal from para 4 onwards read as under: “4. At the outset, the Ld. Counsel for the assessee challenged the validity of order passed by DRP on the ground that the TPO had passed order on a non-existent entity. The Ld. Counsel for the assessee submitted that Allscripts India Private Limited (AIPL) was a Private Limited company incorporated in 1988. During Financial Year 2016-17 relevant to assessment year 2017-18, AIPL was converted into Limited Liability Partnership (LLP) on 21 March 2017. The assessee had brought this fact to the notice of the Ld. Assessing Officer (ACIT Circle-1(1)(1), Vadodara) vide letter dated 12 August 2019 in response to notice issued u/s 142(1) of the Act. Further to the above, again in submission filed by the assessee before the DCITTransfer Pricing-1, Vadodara, the assessee intimated the fact that AIPL had been converted into a LLP. However, despite the aforesaid intimations to the Ld. Assessing Officer and the TPO, the Transfer Pricing Order was passed u/s 92CA(3) of the Act by the TPO in the name of AIPL- which was a nonexistent entity. Further, the assessee filed submission dated 31 March 2021 before the NEAC, Delhi i.e. the Assessing Officer intimating the fact of conversion of AIPL into LLP. However, the Ld. Assessing Officer passed draft assessment order in the name of AIPL, which is a non-existent entity. The Ld. Counsel for the assessee placed reliance on several judicial in support of the contention that once the order passed by TPO and draft assessment order passed by the Ld. Assessing Officer have been passed in the name of a non-existent entity, then the subsequent orders passed by DRP and final assessment order are also bad in law. Accordingly, the issue may be adjudicated in favour of the assessee on this ground of jurisdiction alone. 4.1 In response, the Ld. DR submitted that the DRP order and the final assessment order, against which the present appeal has been filed have been passed in the name of the correct entity i.e. LLP and therefore the final assessment order, against which the present appeal has been filed has been passed in the name of the correct entity and hence the order is not bad in law.

We have heard the rival contentions and perused the material on record. In the case of FedEx Express Transportation v. DCIT 108 taxmann.com 542 (Mumbai - Trib.), the ITAT held that where draft assessment order under section 144C was passed in name of amalgamating company, which was a non-existent entity in eyes of law on date of passing of such order, it became an illegal order and, thus, entire assessment proceedings based on such an invalid draft assessment order were void ab initio and deserved to be quashed. In the case of Siemens Ltd. v. DCIT 147 taxmann.com 118 (Mumbai - Trib.), the ITAT held that where draft assessment order under section 144C was passed in name of amalgamating company, which was a non-existent entity on date of passing of such order, it became an illegal order and thus, entire assessment proceedings based on such an invalid draft assessment order were void ab initio and deserved to be quashed. In the case of BOEING India (P.) Ltd. v. ACIT 121 taxmann.com 276 (Delhi - Trib.), the ITAT held that where draft assessment order under section 144C was passed in name of amalgamated company which was non-existent company, said order was void ab initio. In the case of PCIT v. Maruti Suzuki India Ltd107 taxmann.com 375 (SC), the Hon'ble Supreme Court held that where assessee company was amalgamated with another company and thereby lost its existence, assessment order passed subsequently in name of said non-existing entity, would be without jurisdiction and was to be set aside. In the case of Dimension Data Asia Pacific PTE Ltd. v. DCIT 96 taxmann.com 182 (Bombay), the Hon'ble High Court held that where in case of foreign assessee, Assessing Officer passed final assessment order under section 144C(13), read with section 143(3) without passing a draft assessment order under section 144C(1), said order being violative of provisions of section 144C(1), deserved to be set aside. In the case of Vedanta Ltd. v. ACIT 126 taxmann.com 283 (Delhi - Trib.), the ITAT held that Draft/final assessment order framed in name of non-existent entity is void ab initio and such order is not curable defect under section 292(b).

Now in the instant facts, we observe that the assessee had filed a formal intimation before the DCIT, Transfer Pricing on 11 September 2019 intimating that AIPL has been converted into LLP w.e.f. 21 March 2017 (copy of the same has been placed on record for our perusal). Further, the assessee had also filed letter dated 12 August 2019 before the ACIT, Circle 1(1)(1), Vadodara intimating him about the conversion of AIPL into LLP (copy of the letter has been placed on record for our perusal). Therefore, we observe that the fact of conversion of AIPL into LLP was intimated to both the Ld. Assessing Officer and the TPO much before passing of their respective orders, yet both the TPO and the Ld. Assessing Officer passed the Transfer Pricing Order and the draft assessment order in the name of a nonexistent entity. In our view, the view of the Courts and Tribunals on this issue is unanimous that once the draft assessment order and Transfer pricing order itself are bad in law, having been passed in the name of a non-existent entity, then the final assessment order based on the above orders is void ab initio as well. In view of the above settled position of law, we are of the view that the final assessment order sought to be appeal against is void and hence liable to be set aside.

In the result, Ground Number 2 of the assessee’s appeal challenging the validity of the order passed in the name of the non-existent entity is allowed.”

We find some force in the arguments of the Ld. Counsel for the assessee that the TPO is not given any concession under the Act to pass any order as per his choice and once he fails to do so, it is a nullity. The provisions of section 292BB of the Act in our opinion cannot come to the rescue of the TPO this being a jurisdictional issue. Since in the instant case, despite number of letters addressed by the assessee to the TPO to drop the proceedings on the ground that the same are being proposed on a non-existing company, the TPO passed the order in the name of a non-existent company, therefore, respectfully following the decision of the Ahmedabad Bench of the Tribunal in the case of M/s. Allscripts (India) LLP (As a successor in interest of Allcripts India Pvt. Ltd.) vs. NFAC (supra) (supra), we hold that such order of the TPO passed in the name of a non-existing company is a nullity. Once the order of the TPO is held to be a nullity, the upward adjustment proposed by the TPO cannot be sustained. Therefore, we direct the Assessing Officer to delete the transfer pricing adjustment proposed by the TPO. The additional ground raised by the assessee is accordingly allowed.

Since the assessee succeeds on this legal ground, therefore, the other grounds being academic in nature are not being adjudicated.

In the result, the appeal filed by the assessee is allowed.