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Pr. Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Limited

Civil Appeal · 2019 INSC 815Decided 25 Jul 2019
Civil Appeal No. 5409 of 2019
Dr. Justice D.Y. Chandrachud · Justice Indira Banerjee

Background

Suzuki Powertrain India Limited (SPIL) had amalgamated into Maruti Suzuki India Limited (MSIL) under a court-approved scheme, after which SPIL ceased to legally exist. Despite the assessing officer being informed of this amalgamation, the tax department issued an assessment notice and order for Assessment Year 2012-13 in the name of the now-defunct SPIL rather than its successor MSIL. The Income Tax Appellate Tribunal held the assessment a nullity, and the Delhi High Court upheld this, relying on its own earlier ruling for an identical issue concerning Assessment Year 2011-12 involving the very same parties, against which the Revenue's Special Leave Petition had already been dismissed by the Supreme Court.

Decision Breakdown

The Supreme Court held that jurisdiction to make an assessment cannot be validly founded against a company that has legally ceased to exist following an approved amalgamation, and that this defect is not a mere procedural irregularity curable by participation in proceedings: it goes to the very root of jurisdiction, so there can be no estoppel against this settled legal position. The Court noted that an identical question for the same assessee's prior assessment year (2011-12) had already been conclusively decided against the Revenue by a coordinate bench following its earlier ruling in Spice Enfotainment, and emphasized that consistency and certainty in tax litigation required following that same view here rather than permitting a different outcome for a different assessment year on the same facts. Finding no merit in the Revenue's appeal, the Court dismissed it with no order as to costs.

Lesson Learnt

A tax assessment order issued against a company that has already merged into another entity under an approved amalgamation scheme is void for lack of jurisdiction, not merely defective, once such a legal position is settled for one assessment year, courts will apply it consistently to later years of the same taxpayer to preserve certainty in the tax system.

Official source (sci.gov.in)View Judgment (PDF)

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