TMI Blog2005 (1) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... 1995 and thereafter APL was converted into a public limited company with the name Aimil Ltd., the assessee-company. Along with its return of income, the assessee-company had filed its consolidated balance sheet and P L a/c for the year ending 31st March, 1996 in which the financial results of all the three companies were merged. It was observed that whereas total taxable income was computed on the basis of merged final accounts, deduction under s. 80HHC was computed and claimed on the basis of the financial results of one of the two transferor companies viz., AESPL. The AO was of the view that once when all the three companies stood amalgamated w.e.f. 1st April, 1995 and the assessee having filed a single return of income on the basis of merged accounts, it was not left to the convenience of the assessee-company to claim deduction under s. 80HHC only on the basis of separate accounts of AESPL. According to him, effective from 1st April, 1995, the three separate legal entities had merged into a single legal entity with the name Aimil Ltd., and hence, deduction under s. 80HHC was allowable only on the basis of the consolidated final accounts. Accordingly, the AO proceeded to recompu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of s. 166 r/w s. 160 would come into play and the AO could have exercised option to tax either the beneficiary or the trustee. In support of this contention, the learned counsel placed reliance on the judgment of the Supreme Court in the case of CIT vs. Smt. Kamalini Khatau (1994) 119 CTR (SC) 169 : (1994) 209 ITR 101 (SC). If it was held that entire assessment was rightly made in the hands of the assessee-company, then alternatively, total turnover cannot be taken as Rs. 14,45,05,270 as done by the AO because it also included sales to AESPL effected after the date of arrangement but before the date of the High Court order, as there cannot be sales to self. 6. We have duly considered the rival contentions and the material on record. Let us first consider the relevant clauses in the scheme of amalgamation as approved by the Delhi High Court. Clause 2(a) of the scheme provides as follows: "2(a) With effect from commencement of 1st April, 2005 (hereinafter called the 'appointed date') and subject to the provisions of this scheme in relation to the mode of transfer and vesting, the undertaking and the entire business and all the properties, assets, capital, work-in-progress, curren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are hereinafter referred to have been obtained or passed, and (b) the date on which certified copies of the order of the Court under ss. 391, 392 and 394 of the said Act are filed with the ROC; and such date shall be, hereinafter referred to as 'the effective date'. " Sub-cls. (a), (b), and (c) of cl. 5 provide as follows: "5. With effect from the appointed date upto the date on which this scheme finally takes effect (viz, the effective date) : (a) the transferor companies (i.e., ASA and/or AEX) shall carryon and be deemed to have carried on all its business and activities and shall be deemed to have held and stood possessed of and shall hold and stand possessed of all the said assets for and on account of in trust for the transferee company (i.e. AIMIL); (b) all the profits or incomes accruing or arising to the transferor companies (i.e., ASA and/or AEX) or expenditure or losses arising or incurred by the ASA and/or AEX shall for all purposes be treated and be deemed to be and accrue as the profits or incomes or expenditure or losses of the transferee company (i.e., AIMIL), as the case may be; (c) the transferor companies shall carryon its business activities with reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 809 (SC). 7. In the case of Marshall Sons Co., the assessee-company was to amalgamate with its holding company w.e.f. 1st April, 1982. Sanction of two High Courts was involved and accordingly one High Court approved the Scheme on 21st Jan., 1983 and the other High Court approved it on 11th Jan., 1984. The certified copies of the Court orders were delivered to the respective ROCs on 29th Jan., 1984 and 24th Feb., 1984. The name of the subsidiary company was struck off the Register of Companies on 21st Jan., 1986. On 25th Jan., 1984, the ITO issued a notice under s. 139(2) of the Act to the subsidiary company calling upon it to file a return of its income for asst. yrs. 1984-85 and 1985-86. The subsidiary resisted the requirement on the ground that it had already amalgamated with the holding company w.e.f. 1st Jan., 1982. In the proceedings that ensued; the ITO, inter alia, claimed that: (a) the amalgamation became effective only when it was sanctioned by the Court and after certified copies of the orders of the Courts were filed with the ROCs; (b) that only when the name of the subsidiary company was struck off the register by the ROCs could the subsidiary company be said to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y (subsidiary company) should be deemed to have been carried on for and on behalf of the transferee company. This is the necessary and the logical consequence of the Court sanctioning the scheme of amalgamation as presented to it. The order of the Court sanctioning the scheme, the filing of the certified copies of the orders of the Court before the ROC, the allotment of shares, etc. may have all taken place subsequent to the date of amalgamation/transfer, yet the date of amalgamation in the circumstances of this case would be 1st Jan., 1982. This is also the ratio of the decision of the Privy Council in Raghubar Dayal vs. Bank of Upper India Ltd. AIR 1919 PC 9. Counsel for the Revenue contended that if the aforesaid view is adopted then several complications will ensue in case the Court refuses to sanction the scheme of amalgamation. We do not see any basis for this apprehension. Firstly, an assessment can always be made and is supposed to be made on the transferee company taking into account the income of both the transferor and transferee companies. Secondly, and probably the more advisable course from the point of the Revenue would be to make one assessment on the transferee com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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