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2016 (8) TMI 505 - ITAT KOLKATAMAT - Taxability of book profits of the merged entity - book profits u/s 115JB - Held that:- There was profit as per profit and loss account in the case of HPLCL and loss in the case of HPL on standalone basis. Pursuant to the merger, there was only combined loss as per profit and loss account and hence there cannot be any liability that could arise u/s 115JB of the Act in the hands of the merged entity. It is not in dispute that the merger had taken place with retrospective effect from 1.4.2008 as approved by the Hon’ble Calcutta High Court and hence valid for the period commencing from 1.4.2008 to 31.3.2009 relevant to the Asst Year 2009-10 (i.e the year under appeal before us). Pursuant to the merger, M/s HPLCL does not exist in the eyes of law. We hold that the department cannot be unjustly enriched by the taxes paid by M/s HPLCL based on standalone financials. It is well settled that the Constitution of India mandates the collection of taxes only when it is in accordance with law as per Article 265. In view of the aforesaid findings and discussions, we hold that the ld CITA had rightly directed the ld AO to recompute the book profits u/s 115JB of the Act after taking into accounts the combined accounts of both the companies (i.e merged entity) as well as their unabsorbed losses and depreciation, if any. Accordingly, we find no infirmity in the order of the ld CITA in this regard and dismiss the grounds raised by the revenue.
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