TMI Blog2013 (10) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... ohan Chadha [2004 (8) TMI 386 - SUPREME COURT OF INDIA], wherein it has been held that amalgamation is a blending of two or more existing undertakings into one undertaking, the shareholders of each blending company becoming substantially the shareholders in the company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company. Strictly "amalgamation" does not, it seems, cover the mere acquisition by a company of the share capital of other companies which remain in existence and continue their undertakings, but the context to which the term is used may show that it is intended to include such an acquisition. Respondent assessee had acquired the asset i.e. imported cars after the cut off date i.e. 1st April, 2001 and, therefore, is entitled to depreciation and the bar/prohibition in clause (a) to proviso to Section 32(1) would not apply – Decided against the Revenue. - Income Tax Appeal No. 346/2013, Income Tax Appeal No. 347/2013, Income Tax Appeal No. 353/2013 - - - Dated:- 3-10-2013 - Sanjiv Khanna And Sanjeev Sachdeva,JJ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of the said assets and business of the three concerns. 6. Imported motor cars were originally acquired by the merged entities between 1st March, 1975 and 31st March, 2001, but upon and in view of the scheme sanctioned by the Delhi High Court vide order dated 5th October, 2004, the said cars became the properties of the respondent-assessee with effect from 1st April, 2004. The question raised is whether the respondent-assessee is entitled to claim depreciation as the imported cars were acquired by them after 1st April, 2001. The contention of the Revenue is that the motor cars were acquired by the merged entities within the specified dates and, therefore, even the respondent assessee is not entitled to depreciation on motor cars under the proviso. The said view of the Assessing Officer was affirmed by the Commissioner of Income Tax (Appeals), but the tribunal by the impugned order has accepted the plea of the respondent assessee but on the question of costs or the written down value for the purpose of depreciation, matter has been remanded to the Assessing Officer. 7. Order of the tribunal, while dealing with the contentions raised by the Revenue, has referred to Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r gains arising from the transfer of a capital asset to income-tax. The asset must be one which falls within the contemplation of the section. It must bear that quality which brings s. 45 into play. To determine whether the goodwill of a new business is such an asset, it is permissible, as we shall presently show, to refer to certain other sections of the head "Capital gains ". Section 45 is a charging section. For the purpose of imposing the charge, Parliament has enacted detailed provisions in order to compute the profits or gains under that head. No existing principle or provision at variance with them can be applied for determining the chargeable profits and gains. All transactions encompassed by s. 45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by s. 45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the I. T. Act, where under each head of income the charging pro-vision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... malgamation has no precise legal meaning but it involves blending of two or more existing undertaking into one. In case of merger, there is complete blending of the merged undertaking into the other company, but this does result in the transfer of the assets from the merged undertaking. Assets are acquired by the other undertaking. Upon merger, the earlier concern or undertaking loses its identity and the ownership in the asset. (see Saraswati Industrial Syndicate Limited versus Commissioner of Income Tax, [(1990) 186 ITR (SC)]. In Hindustan Lever versus State of Maharashtra, (2004) 9 SCC 438 expounding on the concept of amalgamation and whether it amounts to transfer, it was held as under:- 9. Section 394 provides that application and order of amalgamation under Section 394 is based on compromise or arrangement which has been proposed for the purpose of amalgamation of two or more companies. The amalgamation scheme, which is an agreement between the companies is presented before the court and the court passes an appropriate order sanctioning the compromise or arrangement. The foundation or the basis for passing an order of amalgamation is agreement between two or more companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may show that it is intended to include such an acquisition. The question whether a winding up is for the purposes of reconstruction or amalgamation depends upon the whole of the circumstances of the winding up. 12. In the case of Singer India Limited (supra), question arose whether upon amalgamation the tenancy rights were transferred and whether there was subletting. It was held that there was transfer and the tenancy or right to occupation of the transferor company got vested in the transferee company. Thus, there was subletting. The law on subletting under the Delhi Rent Control Act, 1958 did not make any exception in favour of a lessee, who may have adopted a course of action of amalgamation. Similar view has been taken in Speedline Agencies versus T. Stanes Company Limited, (2010) 6 SCC 257. 13. In Commissioner of Income Tax versus Mrs. Grace Collis, (2001) 248 ITR 323 (SC) pursuant to scheme of arrangement, assets and liabilities of the amalgamating company became assets and liabilities of the amalgamated company. Shareholders of amalgamating company were issued shares of amalgamated company in lieu of the shares held by them in amalgamating company. The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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