PR. COMMISSIONER OF INCOME TAX, NEW versus MARUTI SUZUKI INDIA LIMITED

Citation: [2019] 9 S.C.R. 799 · Decided: 25-07-2019 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Dismissed

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Judgment (excerpt)

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799
PR. COMMISSIONER OF INCOME TAX, NEW DELHI
v.
MARUTI SUZUKI INDIA LIMITED
(Civil Appeal No. 5409 of 2019)
JULY 25, 2019
[DR DHANANJAYA Y CHANDRACHUD AND
INDIRA BANERJEE, JJ.]
Income Tax Act, 1961 – ss.143(2), 292B and ss.2(31),
92CA(3), 142(1), 144C (15)(b), 148, 153(1), 153(4), 170(2), 260A
– Assessee, joint venture between Suzuki Motor Corporation and
Maruti Suzuki India Limited (MSIL) was known as Suzuki Metal
India Limited upon incorporation – Subsequently, w.e.f 8 June 2005,
its name was changed to Suzuki Powertrain India Limited (SPIL) –
On 28 Nov. 2012, the assessee filed its return of income in the name
of SPIL declaring income of Rs. 212,51,51,156/- – On 29 Jan. 2013,
scheme for amalgamation of SPIL and MSIL was approved by the
High Court w.e.f 1 April 2012 – Notices issued u/s.143(2)and 142(1)
to the amalgamating company – Draft assessment order was passed
in the name of  SPIL seeking to increase the total income of the
assessee by Rs.78.97 Crores – On 31 Oct. 2016, final assessment
order was passed in the name of SPIL – In appeal before ITAT, the
assessee objected that the assessment proceedings were continued
in the name of the non-existent entity SPIL and the final assessment
order issued in the name of non-existent entity was invalid – Final
assessment order set aside – Affirmed by the High Court – Held: In
the present case, notice u/s.143(2) under which jurisdiction was
assumed by the assessing officer was issued to a non-existent
company – Assessment order was issued against the amalgamating
company – This is substantive illegality and not procedural violation
of the nature adverted to in s.292B – Despite the fact that the
assessing officer was informed of the amalgamating company having
ceased to exist as result of the approved scheme of amalgamation,
the jurisdictional notice was issued only in its name – Basis on
which jurisdiction was invoked was fundamentally at odds with the
legal principle that the amalgamating entity ceases to exist upon
   [2019] 9 S.C.R. 799
799
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SUPREME COURT REPORTS
[2019] 9 S.C.R.
the approved scheme of amalgamation – Participation by the
amalgamated company would have no effect since there could be
no estoppel against law, in view of the judgment of Co-ordinate
Bench in Spice Enfotainment case which dismissed the appeal of the
Revenue on 2 Nov. 2017 – Decision in Spice Enfotainment case has
been followed in the case of the respondent while dismissing the
Special Leave Petition for AY 2011-2012 – No reason to take a
different view and the same is adopted in respect of the present
appeal which relates to AY 2012-13 – Constitution of India – Art.141
– Companies Act, 1956 – s.394 – Estoppel – Doctrine of Merger.
Assessee is a joint venture between Suzuki Motor
Corporation and Maruti Suzuki India Limited (MSIL). Upon
incorporation, the assessee was known as Suzuki Metal India
Limited. Subsequently, with effect from 8 June 2005, its name
was changed to Suzuki Powertrain India Limited (SPIL).  On 28
November 2012, the assessee filed its return of income declaring
income of Rs. 212,51,51,156/-. The return of income was filed in
the name of SPIL (no amalgamation having taken place on the
relevant date). On 29 January 2013, a scheme for amalgamation
of SPIL and MSIL was approved by the High Court with effect
from 1 April 2012. On 2 April 2013, MSIL intimated the assessing
officer of the amalgamation. The case was selected for scrutiny
by the issuance of notice under Section 143(2) on 26 September
2013, followed by another notice under Section 142(1) to the
amalgamating company. On 11 March 2016, draft assessment
order was passed in the name of  SPIL (amalgamated with MSIL).
The Order sought to increase the total income of the assessee
by Rs. 78.97 crores in accordance with the order of the Transfer
Pricing Offer in order to ensure that the international transactions
with regard to the payment of royalty to the Associated
Enterprises is at Arm’s Length. On 12 April 2016, MSIL filed
appeal before the Dispute Resolution Panel (DRP) as successor
in interest of the erstwhile SPIL, since amalgamated. DRP issued
order in the name of MSIL. Final assessment order was passed
on 31 October 2016 in the name of SPIL making addition of Rs.
78.97 crores to the total income of the assessee. The assessee
filed appeal before the Income Tax Appellate Tribunal. The
Tribunal vide order dated 6 April 2017, set aside the final
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assessment order on

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