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Commissioner of Income-tax, Pune-i Vs. Swastik Rubber Products Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany;Direct Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Application No. 124 of 1978
Judge
Reported in[1983]140ITR304(Bom)
ActsIncome Tax Act, 1961 - Sections 170 and 256(2); Companies Act, 1956 - Sections 391 and 394(2)
AppellantCommissioner of Income-tax, Pune-i
RespondentSwastik Rubber Products Ltd.
Appellant AdvocateR.J. Joshi, Adv.
Respondent AdvocateS.E. Dastur, Adv.
Excerpt:
- .....and in the circumstances of the close, the tribunal was right in law in holding that the effective date of amalgamation is july 1, 1971, relying only on clauses (1), (2) and (3) of the scheme of amalgamation without considering the scheme of amalgamation as a whole 2. whether, on the facts and in the circumstances of the case, the tribunal erred in law in not holding that the effective date of amalgamation is december 31, 1971, ignoring the; provisions of clause (15) of the scheme of amalgamation and sanction of the controller of capital issues given on december 31, 1971 3. whether, the tribunal is correct in holding that the consent from the controller of capital issues is only a formality 4. whether, on the facts and circumstances of the case, the tribunal was justified in holding that.....
Judgment:

Kania, J.

1. This is an application, made at the instance of the Commissioner of - of Income-tax, under s. 256(2) of the I.T. Act, 1961 (hereinafter referred to as ' the said Act '), for directing the Income-tax Appellate Tribunal to state a case and to refer to this court for determination of the following questions :

'1. Whether, on the facts and in the circumstances of the close, the Tribunal was right in law in holding that the effective date of amalgamation is July 1, 1971, relying only on clauses (1), (2) and (3) of the scheme of amalgamation without considering the scheme of amalgamation as a whole

2. Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in not holding that the effective date of amalgamation is December 31, 1971, ignoring the; Provisions of clause (15) of the scheme of amalgamation and sanction of the Controller of Capital issues given on December 31, 1971

3. Whether, the Tribunal is correct in holding that the consent from the Controller of Capital Issues is only a formality

4. Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that income earned or accruing or arising after July 1, 1971, to December 31, 1971, is not to be included in the total income of the assessee for the assessment year 1972-73 ?'

2. As far as questions Nos. 1 and 2 are concerned, as the Tribunal has pointed out in its order rejecting the application for making a reference to this court., both these questions are misleading, because the Tribunal has not based its conclusions regarding the effective date of amalgamation received on the basis of cls. (1), (2) and (3) of the scheme of amalgamation, but has considered and discussed in detail the provisions of cls. (14) and (15) of the said scheme on which reliance was placed by the Department. The dispute relates to the effective date of amalgamation. The order of this court sanctioning the scheme of amalgamation, material portions of which have been set out by the Tribunal in its judgment, specifically provides that the whole of the undertaking and business and the property of the Bank of Maharashtra Ltd. as also its rights, powers, authorities and privileges and all its properties, movable and immovable, cash balance and so on would stand transferred to the successor-company, viz., Swastik Rubber Products Ltd., with effect from 1st July, 1971, which was referred to as' the appointed date ' in the scheme of amalgamation.

3. Section 394 of the Companies Act, 1956, deals with reconstruction and amalgamation of companies. Sub-section (2) of that section, interalia, provides that where an order provided for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to and vest in, and those liabilities shall be transferred to and become the liabilities of the transferee-company. In view of this, there can be only one answer to the question as to when the said scheme of amalgamation became effective and that is that the said scheme became effective from 1st July, 1971, as held by the Tribunal. Clause (15) of the scheme of amalgamation, on which reliance was placed by Mr. Joshi, the learned counsel for the petitioner, and which is to the effect that the said scheme would take effect finally upon and from the date on which the last of the sanctions referred to therein was obtained, could not alter the legal effect of the order sanctioning the scheme of amalgamation, passed by this court as aforesaid. Moreover, even as far as the scheme of amalgamation is concerned, clause (3) of the said scheme makes it clear that with effect from the appointed date the transferor-company shall be deemed to have been and to be carrying on all business and activities for and on account of the transferee-company until the effective date referred to in clause (15) thereof.

4. In view of what has been stated above, we see no reason to direct the 'Tribunal to state a case and refer the aforestated questions to this court as applied for by Mr. Joshi. The application, is, therefore, dismissed and the rule is discharged with costs.


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