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2020 (11) TMI 117 - HC - Income TaxNon-availment of the alternate statutory appeal remedy - income tax implications - transaction is not a demerger? - HELD THAT:- Rule of exclusion of writ jurisdiction by availability of an alternative remedy, is a rule of discretion and not one of compulsion and there could be contingencies in which the jurisdiction under article 226 of the Constitution of India could be exercised in spite of availability of an alternative remedy. The question to be decided is relating to the jurisdiction, manner of exercise of power by the Assessing Officer and the correctness and propriety of the decision making process and whether principles of natural justice was adhered. Therefore, it is held that the Writ Petitions are maintainable and cannot be rejected solely on the ground that as against the impugned assessment orders, the statute provides for alternate remedy. Accordingly, issue No.1 is decided in favour of the petitioner. The grounds raised in the present writ petitions are some ofthe exceptions cited in the aforesaid decision for maintaining a writ petition without availing the alternate remedy and hence, the petitioner can maintain the writ petitions without availing the statutory appeal remedy. 'Demerger' under Section 2(19AA) of the Income Tax Act - Whether transaction is not a demerger and that the “income tax implications” referred to in the statement under Section 393 of the Companies Act will not form a part of the “Scheme of Arrangement”? - whether the statement under Section 393 of the Companies Act, 1956 would form a part of the Scheme of Arrangement and if so, whether the proceedings for sanctioning of the Scheme under Sections 391 to 394 would be a proceeding in rem? - AO disallowed the depreciation claim made by the petitioner and treated the Scheme as one of 'demerger' under Section 2(19AA), thereby restricting the claim for depreciation, only on the Written Down Value (WDV) of the assets being transferred from PSCL to PEL - HELD THAT:- Scheme of Arrangement between PSCL and PEL, which expressly states that the Scheme is not a Demerger, within the meaning of Income Tax Act, has attained finality and statutory force not only “inter se” PSCL or PEL but also “in rem”. Accordingly, the Scheme, that includes the Income Tax implications given in the statement and which explanatory statements are in conformity with the scope of the terms of arrangement, would be binding on the Tax Department. On a conjecture that the Scheme is one of Demerger under Section 2(19AA), the Assessing Officer had disallowed the depreciation claim made by the petitioner and thereby restricted the claim for depreciation only on the WDV of the assets transferred from PSCL to PEL. The Company Court, while considering the petition for sanction under the Companies Act, had approved the Scheme of Demerger and the statement under Section 393 of the Companies Act. As held in the preceding paragraphs, the statements, being in conformity with the scope of the terms of the Scheme of Arrangement, becomes an integral part of the Scheme, which was sanctioned by the Company Court, and thus, the transfer of the undertakings will not be considered to be one of the Demerger within the meaning of Section 2(19AA) of the IT Act. As such, the basis of the impugned proceedings itself is fallacious and the further proceedings thereon, cannot be sustained. Accordingly, the impugned proceedings are quashed. The concerned Assessing Authority shall taken into consideration of the findings of this Court that the Scheme of Arrangement is not a Demerger, within the meaning of Section 2 (19AA) and take further course of proceedings, in accordance with law. WP allowed.
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