J U D G M E N T

MANMOHAN, J (Oral):

C.M.No.15980/2022 Exemption allowed, subject to all just exceptions.

Accordingly, the application stands disposed of.

ITA No.71/2022

1. Present appeal has been filed challenging the order dated 17th August, 2020 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No.9765/Del/2019 for the Assessment Year 2015-16.

2. The appellant-revenue has suggested the following substantial questions of law:-

“1. Whether on facts and in the circumstances of the case and also on the prevailing law, Hon’ble ITAT is justified in allowing the appeal of the assessee on the grounds that draft order framed u/s 144(c(1) of the Act is in the name of a non-existent company and accordingly, void ab initio, making all subsequent proceedings non-est, ignoring the fact that final assessment order has been passed in the name of the new entity as per the directions of Hon’ble DRP.

2. Whether on facts and in circumstances of the case and also on the prevailing law, Hon’ble ITAT is justified in deleting addition of Rs.22,16,059/- on account of receivables, which in contravention of the judgment of Hon’ble Delhi High court in the case of Kusum Healthcare.

3. Whether on facts and in the circumstances of the case and also on the prevailing law, Hon’ble ITAT is justified in allowing the appeal of the assessee on disallowance u/s 40A(i) of the Income Tax Act, 1961 ignoring the facts that the matter has been decided in favour of Revenue in the case of Centrica India Offshore India Ltd. 364 ITR 336 before the Hon’ble High Court.”

3. Learned counsel for the appellant states that ITAT has erred in allowing the appeal of the assessee on the ground that the draft order framed under Section 144C(1) of the Income Tax Act, 1961 (‘the Act’) was issued in the name of a non-existing company and was accordingly void ab-initio making all subsequent proceedings non-est ignoring the fact that initial jurisdictional notice dated 16th March, 2016 under Section 143(2) of the Act had been issued to the correct entity and the final assessment order dated 29th October, 2019 had been passed in the name of the new entity as per the Directions of the Dispute Resolution Panel (DRP).

4. He further states that the ITAT has erred in deleting the addition of Rs.22,16,059/- on account of receivables in contravention of the judgment of this Court in Principal Commissioner of Income Tax vs. Kusum Health Care Pvt. Ltd., (2017) SCC OnLine Del 12956, wherein it has been held as under:-

“11. The court is unable to agree with the above submissions. The inclusion in the Explanation to section 92B of the Act of the expression “receivables” does not mean that dehors the context every time of “receivables” appearing in the accounts of an entity, which may have dealings with foreign associated enterprises would automatically be characterized as in international transaction. There may be a delay in collection of monies for supplies made, even beyond the agreed limit, due to a variety of factors which will have to be investigated on a case to case basis. Importantly, the impact this would have on the working capital of the assessee will have to be studied. In other words, there has to be a proper inquiry by the Transfer Pricing Officer by analyzing the statistics over a period of time to discern a pattern which would indicate that vis-à- vis the receivables for the supplies made to an associated enterprise, the arrangement reflects an international transaction intended to benefit the associated enterprise in some way.”

5. Leraned counsel for the appellant also states that the ITAT has erred in deleting the additions of Rs.56,58,19,799/- made by the Assessing Officer under Section 40(a)(ia) read with Section 195 of the Act without appreciating that the assessee was clearly liable to deduct tax on this expenditure. In support of his submission, he relies upon the judgment of this Court in Centrica India Offshore Pvt. Ltd. vs. Commissioner of Income Tax and Ors., (2014) 364 ITR 33