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IRM LIMITED Versus DEPUTY COMMISSIONER OF INCOME TAX - CIRCLE - 4

2016 (7) TMI 972 - GUJARAT HIGH COURT

Reopening of assessment - scheme of amalgamation questioned - Held that:- On question of claim of depreciation and unabsorbed loss of the amalgamating company upon amalgamation was examined by the Assessing Officer thoroughly. In fact the assessee had made as many as three different representations why such claim should be granted. The Assessing Officer accepted such claim in the order of assessment without making any disallowance. The fact that the Assessing Officer did not make any observation .....

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me was brought to the notice of the Assessing Officer particularly in above referred letter dated 16.9.2010. - When once therefore, a scheme has been sanctioned by the High Court, which would relate back to the appointed date and such order is passed before the order of assessment is passed, it cannot be stated that the assessee should be denied the benefit of such development merely on the ground that during the accounting period and when the return was filed, the High Court order sanctioni .....

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see. - SPECIAL CIVIL APPLICATION NO. 13457 of 2014 - Dated:- 12-7-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITONER : MR B S SOPARKAR, ADVOCATE FOR THE RESPONDENT : MRS MAUNA M BHATT, ADVOCATE ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged the notice dated 24.3.2014 issued by the respondent Assessing Officer seeking to reopen the petitioner's assessment for the assessment year 2009-2010. 2. Brief facts are as under. The petitioner is .....

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ax Act ( the Act for short) on 5.12.2011 without making any disallowance of such claim of depreciation and business loss. To reopen such scrutiny assessment, the Assessing Officer issued the said notice in which he recorded the following reasons : ...On verification, it is revealed that the assessee company wrongly claimed the losses. It was noticed from the computation of income that the taxable income of the assessee was arrived after adjusting current & old unabsorbed business losses and .....

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losses/ depreciation of Ms. Medlak Asia Pvt. Ltd. (being amalgamated with the (assessee Company) set off/ absorbed during the year from the profit of the assessee company. 2,38,23,768/- Further, it was noticed from the documents of amalgamation filed with the return of income that the consent of the share holders & creditors of both the companies for amalgamation we.f. 1.4.2008 {appointed date] was obtained in April 2009 and after the petitions of both the companies were admitted, the same w .....

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affidavit on 09.06.2010 observing that the sundry creditors of the transferor company rose from 139.52 lacs to ₹ 173.28 lacs though no purchases were shown in the P & L Account as on 31.03.2009 and that the transferor company had not given any justification/ clarification in spite of the fact that the Registrar of Companies, Gujarat had called for clarification from the Company vide his letter dated 11.05.2010. The Company filed their submission. After hearing the learned advocate for .....

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d in Clause 15 of this Schemes are obtained. 18. This Scheme, although operative from the Appointed Date, shall take effect finally upon and from the date on which any of the aforesaid sanctions or approval or order shall be last obtained, which shall be the Effective date for the purposes hereof. Thus, the Scheme of Amalgamation has become effective w.e.f. 12.8.2010 only till which date both the above Companies were separate entities. A Scheme of amalgamation or two or more companies pursuant t .....

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Court when the decision was awaited, the claim of the assessee for the benefits of amalgamation before receiving the approval of the High Court, was liable to be rejected. In fact, the amalgamated Company has. finalised their accounts for the F.Y. 2008-09 without incorporating the assets and liabilities of the amalgamating Company. Both these companies had finalised their accounts separately. The irregular set off above losses amounting to ₹ 2,38,23,768/- is required to be disallowed. In .....

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ons were however, rejected by Assessing Officer by order dated 16.9.2014. Hence the petition. 4. Learned counsel for the petitioner raised the following contentions : 1) During the original assessment, the entire issue was examined by the Assessing Officer. The assessee had given written replies to the queries raised. Only upon being satisfied about the assessee's claim, the Assessing Officer in the order of assessment made no disallowances. Any attempt on part of the Assessing Officer to re .....

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t the High Court had approved the scheme was brought to the notice of the Assessing Officer during the original assessment. 5. On the other hand, learned counsel Mrs. Mauna Bhatt for the department submitted that this aspect was not examined by the Assessing Officer during the original assessment. The petitioner had raised a wrong claim. Since the claim was sanctioned by the High Court only on 12.10.2010, the claim therefore did not arise during the year under consideration. In any case, the sch .....

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ied with and the final sanction of the amalgamation by H'ble Guj HC is awaited. In view of the Supreme Court decision in the case of M/s. Marshall Sons & Co. I Ltd V/s. ITO, 223, ITR 809(SC), the returns of Income of the companies have been made on basis that the scheme as presented is effective. 7. Thus at the time of filing returns, the assessee had made two disclosures. Firstly, that the scheme of merger is approved by two companies with effect from 1.4.2008 but such scheme is pending .....

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o the assessee company wef 142008, is awaiting sanction by the Hon. Guj. HC accordingly the statement of total income of the assessee company is duly updated with the audited numbers of M/s. Medtek Asia P.Ltd. being assessable in the assessee's hands. 9. In a further communication dated 8.7.2011, the assessee had conveyed to the Assessing Officer as under : 1. The assessee company is eligible for setoff of current loss as well as unabsorbed past loss and depreciation of the company Medtek As .....

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The assessee company has Vide the Return of Income filed the subject ereturn and declared the fact of amalgamation of M/s. Medtek Asia P. Ltd. into the assessee company wef 1.4.2008. As regards Medtek Asia P. Ltd, the said company s amalgamation into the assessee company wef. 142008, is now sanctioned by the Hon Guj HC (encl. GUJ.HC order copy and scheme) accordingly the statement of Total Income of the assessee company is duly updated (encl. herewith) with the audited numbers of M/s. Medtek Asi .....

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that the Assessing Officer did not make any observations with respect to the same in the order of assessment is of no consequence. 12. Coming to the question of validity of the reasons also, we are inclined to accept the petitioner's contention. Few relevant dates which are not in dispute are that the appointed date as per the scheme of amalgamation was 1.4.2008, effective date is referred to as the date on which the final sanction have been granted which in the present case would be 12.10. .....

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me unless ofcourse the High Court shifts such date while approving the scheme. The objections raised by the counsel for the Revenue that the scheme itself envisaged its effect from a different date is neither borne out from the record nor is part of the objections raised by the Assessing Officer in the reasons recorded. Reference to the effective date being later of the dates, when final sanction is granted, would not alter the appointed date of 1.4.2008. In fact, the Assessing Officer's mai .....

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