Novateur Electrical and Digital Systems Pvt. Ltd Vs ACIT (ITAT Mumbai)
Conclusion: Order passed by TPO in the name of assessee as “Novateur Electrical and Digital Systems Pvt. Ltd. [formerly Legrand (India) Ltd./Indo Asian Electric Pvt. Ltd.]” quoting PAN in the header table was of Legrand was not valid by non-compliance/adherence to the mandated procedure under section 144C vitiated the assessment in itself and was barred by limitation.
Held: Assessee-company was engaged in the manufacturing and sale of electrical products such as miniature circuit breakers and wiring accessories. Assessee had filed its return of income for the assessment year 2011-12, declaring a loss. Later on, it revised its return, claiming depreciation on goodwill arising from the acquisition of the switchgear division of Indo Asian Fusegear Ltd. through a slump sale. It was to be noted that Legrand India Pvt. Ltd., another entity, was amalgamated with Novateur effective from April 1, 2011. Both Novateur and Legrand had filed separate returns for the assessment year 2011-12, and separate scrutiny assessments were initiated for each. During the assessment proceedings, Transfer Pricing Officer (TPO) passed an order adjusting the arm’s length price (ALP) of international transactions undertaken by Legrand. However, the TPO’s order mentioned Novateur’s name along with Legrand’s PAN, creating confusion. AO issued a draft assessment order incorporating the TPO’s adjustments and passed the final assessment order. Assessee challenged the validity of this order, arguing that it was passed beyond the limitation period prescribed under Section 153. The company contended that since no transfer pricing adjustments were made in its case, the final assessment order should have been passed. It was held that on record that two separate assessment proceedings were initiated by two different Income-tax authorities for two separate legal entities, i.e., Novateur (assessee) and Legrand. Though, Legrand did not exist at the time of culmination of the assessment proceeding so initiated, yet the same had to be brought to logical end by passing separate orders by taking into record the fact of amalgamation of Legrand into Novateur. It was a case where the statutory procedure mandated in section 144C had been attempted to be by passed by merely mentioning the name of the assessee as the amalgamated entity with its former name and the name of amalgamating company. Non-compliance/adherence to the mandated procedure vitiates the assessment in itself. Thus, it was a case where there was no variation in the income by virtue of order of TPO, more particularly, no separate TP order for the transactions specific to Novateur, the condition prescribed for assessee to be an eligible assessee were not met and therefore procedure for issuance of draft order calling for objections and taking further steps did not apply. The impugned order passed u/s.143(3) r.w.s. 144C was barred by limitation as it ought to have been passed on or before 31.03.2015.
