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2013 (10) TMI 514 - ITAT AHMEDABADParty to litigation - aggrieved person - In case of demerger of a company, who should be made the party to the litigation - Held that:- Undisputedly this is a case of Court approved demerger - High Court of Judicature at Bombay had approved the scheme vide an order 22nd June, 2010 - Under the scheme, the entire business relating to the Indian undertakings of the 'transferor companies' were to stand transferred to and vested in the petitioner i.e. CIL w.e.f. the 'appointed date' in pursuant to the provisions of section 391 and 394 of the Companies Act - Not only the legal proceedings but as per clause 12 of the scheme it was specifically provided that the transferee company shall be responsible for the income tax proceedings and also shall be entitled to claim refund. - As per sub clause (a) of Section 170 the 'predecessor' is subject to assessment in respect of the income of the previous year in which the succession took place upto the date of the succession. However, as per sub clause (b) of section 170 (1) the 'successor' shall be assessed in respect of the income of the previous year after the date of succession. In our humble understanding a "successor" is held responsible for assessment after the date of succession. We hereby take a little liberty with due respect to the legislatures that if the meaning of clause (b) is slightly extended than it can be supposed that a 'successor/transfree' shall be held responsible for the legal proceedings after the date of succession. Rather sub section (3) of Section 170 prescribes that when any sum payable under this Section in respect of the income of such business for the previous year in which the succession took place upto the date of succession assessed on the 'predecessor' cannot be recovered from him, then the said sum shall be payable and recoverable from the successor. Meaning thereby the successor/transferee is liable for any liability of the predecessor/transferor - burden of liability gives an inherent right to defend a litigation, therefore the successor within his rights can file an appeal - it is apparent that a resulting company on one hand acquires the assets, side by side, on the other hand, responsible for the liabilities, including tax liability. Further, it is important to note that sub-sec. (vi) says that the transfer of the undertaking is on a going concern basis, meaning thereby, as a result of demerger the effected undertaking looses it's independent legal identity which merges with the resultant company. It's entity thereafter vests with the resulting company. As a natural corollary the litigation can not be pursued against a non-existing legal body. That is why in case of a 'wound-up' company the Tribunal Rules have laid out a procedure of filing of appeal - where an assessee whether an appellant or a respondent dies or become insolvent or in the case of a company being wound up, then that appeal shall not abate and shall be continued by the executor, legal representatives or the administrator or the liquidator. This Rule further provides that a revised Form 36 giving revised names of the party can be filed. The revised Form 36 shall specify the appeal number as originally assigned and shall be made part of the original file. We have cited Rule 26 with a definite purpose because at present we are dealing with those appeals which have been recently filed under the apprehension that the original appeals filed by the transferee company may be held as not maintainable. Even in that event, there was no requirement to file fresh appeals in the name of the transferor i.e, Cairn Energy Gujarat BV and remedy lies by filing a revised form 36 as suggested in Rule 26 of Tribunal Rules - Decided against Assessee.
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