The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) comprising Rahul Chaudhary (Judicial Member) and Prashant Maharishi. ( Accountant Member ) directed to recompute the Arm Length Price (ALP) by including excluded comparable chosen for transfer pricing .
The assessee company Silverline Trading Company Ltd name has been struck off as per the certificate dated 18th March, 2011 issued by MCA , wherein the application made by the assessee from Easy Exit Scheme [EES] , 2010 dated 28th August, 2010, was accepted and in terms of Section 560(5) of the Companies Act, 1956, the name of the assessee company has been struck off from the register and the company was dissolved from that date and despite this fact available with the learned Assessing Officer, the assessment orders were passed in the name of „Silverline Trading Company Ltd.
Aggrieved, the assessee filed an appeal before the two member bench of CIT(A)who allowed the appeal.Thereafter against the order of CIT(A) revenue filed appeal before the tribunal.
Assesee representative , Gaurav Kabra , before the bench argued that the assessee -company was struck off from the Register of Companies and stood dissolved from the date of publication of a notice in The Gazette of India issued for 22nd to 28th April, 2006. Hence no assessment order should be passed against the assessee company .
The Department representative, A judiya Manish, supported the decision of lower authorities .
After observing the submissions of both parties the tribunal determined that “any director of the company could have filed an appeal challenging the assessment order on the ground that the liability arising out of the impugned assessment order, under the circumstances pointed out in Section 179 of the Income Tax Act, could be fastened upon him”.
Further observed that on the date the assessment order was passed, the appellant-company stood dissolved under Section 560(5) of the Companies Act and, therefore, could not have been assessed.
The bench also viewed that Making of an assessment order against a nonexistent company would be like passing a decree by a civil court against a dead person.
Therefore If the company is not in existence at the time of making the assessment, no order of assessment can be validly passed upon it under the Income Tax Act
Finally the ITAT bench concluded that once a company is dissolved under Section 560(5) of the Companies Act, it ceases to exist and, therefore, no order of assessment could be validly passed against it under the Income Tax Act and if it is passed, it would be a nullity.
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