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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 06.02.2018
+ ITA 135/2018
PR.COMMISSIONER OF INCOME TAX-6 ..... Appellant
Through: Mr. Rahul Chaudhary, Sr. Standing
Counsel with Mr. Sanjay Kumar, Jr. Standing
Counsel for Income Tax Deptt.
versus
NOKIA SOLUTIONS & NETWORK INDIA PVT LTD
(FORMERLY KNOWN AS, NOKIA SIEMENS NETWORK PVT
LTD) ..... Respondent
Through: Ms. Rashmi Chopra with
Ms. Manasvini Bajpai, Advs.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE A. K. CHAWLA
S. RAVINDRA BHAT, J.(ORAL)
1. The Revenue is aggrieved by the order of the ITAT which
concluded that the assessment made in that case, was in respect of
a company that had ceased to exist. It urges that in the facts of this
case the ruling of this Court in Spice Entertainment Ltd. v.
Commissioner of Income Tax 247 CTR 500 (Del.) is inapplicable.
2. The assessee M/s Nokia Siemens Network Pvt. Ltd.
(hereafter referred to as "the old company") had filed its returns for
A.Y. 2006-07 on 29.11.2006. Return was processed under Section
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143(1) of the Income Tax Act, 1961 (hereafter referred to as "the
Act") on 27.06.2007. However, the returns were selected for
scrutiny and notice was issued under Section 143(2) of the Act on
12.10.2007. In the meanwhile, pending proceedings of
amalgamation before the Karnataka High Court, an order was
made on 09.01.2009, by virtue of which, the old company merged
with Nokia Solutions & Network India Pvt. Ltd. i.e. the respondent
in this case. The orders of the lower authorities show that
communications were addressed by the respondent, for transfer of
tax files in the jurisdictional office of the old company to the new
company's jurisdictional officer on account of the merger.
Apparently, the respondent addressed a letter to the PRO and other
tax authorities on 25.05.2009. In these circumstances, notice was
issued to the old company (by then non-existent) under Section
142(1) of the Act on 10.08.2009. Since international transactions
were involved, the AO referred the matter to the Transfer Pricing
Officer based on whose report a draft assessment order was made
on 29.12.2009. The dispute resolution panel made its
recommendations/returned findings on 20.09.2010 and a final
assessment was framed on 28.10.2010 but in the name of the old
company. It was in these circumstances that the respondent
preferred an appeal to the ITAT and urged an additional ground
that the assessment was framed in the name of a non-existing
entity. The ITAT considered that this was a fresh or additional
ground and remitted the matter to the DRP for examination of this
ground on 16.04.2014 by its order (hereafter referred to as "the
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remand order"). On 26.02.2016, the DRP returned a finding that
the assessments were framed in the name of the non-existing entity
but proceeded to direct the AO to frame the assessment in the name
of the respondent which was complied with and a final assessment
order was made on 29.04.2016 in the name of the
respondent/assessee.
3. The respondent/assessee appealed to the ITAT urging that
the ruling in Spice Entertainment Ltd. (supra) squarely applied
since the proceedings, to start with, culminating in the assessment
order of 28.10.2010 were a nullity and that in the circumstances the
DRP's directions could not have resulted in an order, based upon
the proceedings that were a nullity. The ITAT accepted these
arguments holding that the law declared in Spice Entertainment
Ltd. (supra) squarely applied.
4. The Revenue argues that the respondent/assessee did not
demur when the matter was remitted for consideration by the DRP
and that the question of jurisdiction or the order being a nullity was
urged before the ITAT, in the first round of proceedings for the
first time. In the circumstances, when the DRP considered the
facts, it concluded that the assessment originally framed was in
respect of a non existing entity. Given the changed circumstances
and subsequent development, it could not have directed the
framing of an assessment in favour of a non existing company and
therefore directed the AO to frame it in the name of the
respondent/assessee, which it did. It is also contended that the
DRP rendered express findings that the proceedings before it in
ITA No.135/2018 Page 3 of 5
the earlier round before the Tribunal were in continuation of the
assessment proceedings and that framing final assessment, after
remitting in the name of the respondent/assessee, was justified in
law. It was submitted that in these circumstances the facts here are
entirely different from the facts that the Court had to consider in
Spice Entertainment Ltd. (supra) and all other tests that followed it.
5. The assessee, which is represented on advance notice, urges
that the DRP could not have directed assessments to be completed
in the manner that it did, given that the remand order of the ITAT
was confined to only requiring it to render findings as to whether
the assessment originally framed was in respect of a non existing
entity. It was submitted that the DRP exceeded its remand and
consequently the ITAT was justified in holding that Spice
Entertainment Ltd. (supra) applied.
6. It is evident from the narration of facts that in the first
instance the assessment was conducted in the name of a non
existing entity. The DRP to whom the matter was directed by the
first remand of the ITAT, was not directed to, in turn, require the
AO to "better" the original incurable illegality and here the DRP
clearly did that. The fact that the matter was remitted at the
instance of the assessee who did not question the remand ipso facto
does not, in any manner, further the Revenue's contentions. The
Revenue had also urged that even in the first place when the
assessee approached the DRP, the name of the old entity was
invoked and that consequently it cannot now say that the
assessment was a nullity. This Court is of the opinion that the
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ruling in Spice Entertainment Ltd. (supra) is categorical, in that, if
the assessment is concluded in favour of a non existing entity, then
notwithstanding Section 292B, the position does not improve.
Applying Spice Entertainment Ltd. (supra), this Court had in
Commissioner of Income Tax v. Dimension Apparels Pvt. Ltd.
(2015) 370 ITR 288 also held that the position taken or urged by
the assessee cannot be held against it if the primary jurisdiction
does not exist i.e. to conclude an assessment in the name of a non
existing entity.
7. In these circumstances, having regard to the legal position
established by the authorities, the Court is of the considered view
that the Revenue's arguments are not merited; no question of law
arises. The appeal is dismissed.
S. RAVINDRA BHAT, J
A. K. CHAWLA, J
FEBRUARY 06, 2018
kks
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