Bharti Airtel Limited Vs DCIT (ITAT Delhi)
Case Overview: This case involves appeals filed by Bharti Airtel Limited (as successor to Telenor India Communications Pvt. Ltd.) against assessment orders passed by the Deputy Commissioner of Income Tax for assessment years 2017-18 and 2018-19. The appeals were heard together by the Income Tax Appellate Tribunal (ITAT), Delhi Bench, and disposed of through a common order due to identical grounds raised in both appeals.
Facts of the case: Telenor India Communications Pvt. Ltd. (TCPL), a telecom operator in six Indian circles, merged with Bharti Airtel Limited on May 14, 2018, through an NCLT-approved scheme. Prior to the merger, TCPL had filed returns declaring NIL income with carry-forward losses of ₹9.92 billion for AY 2017-18. Despite being formally notified of the merger, tax authorities continued scrutiny assessment proceedings against the now non-existent Telenor entity, making transfer pricing adjustments of ₹6.29 crores and ₹14.09 crores for AYs 2017-18 and 2018-19, respectively.
Legal Issues: The primary legal issue in this case was whether assessment proceedings conducted in the name of a non-existent entity (Telenor India Communications Pvt. Ltd.) after its amalgamation with Bharti Airtel Limited were valid and sustainable in law.
Courts Judgement: The ITAT allowed both appeals on the jurisdictional ground that assessment orders were passed against a non-existent entity. The Tribunal noted that despite multiple communications about the merger (including a formal letter on June 12, 2018 with the NCLT order), tax authorities continued proceedings against Telenor. Interestingly, the TPO even acknowledged the merger in the title and body of the order but still issued it in Telenor’s name. Relying on precedents from the Delhi High Court (PR Commissioner of Income Tax-7 v. Vedanta Ltd.) and the Supreme Court (PCIT v. Maruti Suzuki India Ltd.), the ITAT held that such assessment orders suffered from a “legal infirmity” that Section 292B of the Income Tax Act could not cure. The Tribunal quashed the assessment orders as “unsustainable in the eye of law” without addressing the transfer pricing issues.
