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TMI Blog2016 (8) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts for the AY 2009-10 relating to the FY 2008-09 that was subject to audit by the statutory auditors appointed by the Comptroller and Auditor General of India (hereafter referred to as the C&AG) since the assessee was covered under the provisions of section 619B of the Companies Act, 1956. However, due to a company case, there was an order of the Courts restraining the assessee from considering, amongst others, the accounts at the meeting of the Board of directors and also from holding the Annual General Meeting (AGM) of the Shareholders as prescribed under the Companies Act till the disposal of the case. Consequently, the accounts of the assessee for the relevant financial year could not be approved by the Board of Directors or laid before the shareholders for their approval at the AGM. The assessee filed its original return of income on 24.09.2009. In the said return, the total loss as per the normal provisions of the Act was computed by the assessee at Rs. 313,57,98,702/- and hence there was no taxable income. However, under Section 115JB of the Act (hereinafter referred to as MAT), in view of the accounts not being approved by the Board of Directors and due to restriction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the letter was also sent to the AO of the Assessee. The assessee wishes to place on record that there is a factual error in the 3rd paragraph of the Ld. AO's order where he asserts that it was only during the assessment proceedings that it was informed that HPLCL has merged with the assessee, whereas the assessee had duly informed the ld AO on 26.10.2009 itself intimating the fact of merger at which point of time, even the notice u/s 143(2) of the Act was not issued by the ld AO. During the assessment proceedings, in response to a query from the Ld. AO, the assessee vide letter dated 14/l2/2011 informed the Ld. A.O. that since HPLCL was merged with the assessee with retrospective effect from 01/04/2008, then it had to be held that the provisions of section 115JB of the Act did not apply to the profits of the said HPLCL as well as for the same reasons set out above as the income of HPLCL is merged with HPL w.e.f the date of merger i.e. 01/04/2008 (AY 2009-10) and has become the income of the assessee. There is no separate existence of the profits of the assessee any longer. Consequently, the assessee was also entitled to refund of the tax paid by HPLCL (Rs.4,28,86,212/-). 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the merged company. 4. The assessee also placed reliance on the decision of Co-ordinate Bench of Mumbai Tribunal in the case of Deputy Commissioner Of Income-tax vs. Beck India Ltd. (2008) 26 SOT 141, wherein the Hon'ble High Court sanctioned the scheme of amalgamation on 20/9/2001 with retrospective effect from 1/1/2001. Here also the two companies had filed their returns separately and had also held their AGM separately but the Mumbai Tribunal held that the merging company was entitled to prepare second set of accounts combining the book profits u/s 115JB of both companies as well as their unabsorbed losses and depreciation. This decision flows from the principle that once a company is merged into another it cannot have a separate income and so no assessment can be made considering separate incomes. 5. The ld CITA appreciated the contentions of the assessee and allowed the grounds raised by the assessee in this regard. Aggrieved, the revenue is in appeal before us on the following grounds:- "1. That is the facts and in law of the case the Ld. CIT(A) erred in directing the AO to recomputed the book profit as per the I. T. Act, after taking income combining the book profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on standalone basis (page 50) ; Intimation of amalgamation vide letter dated 26.10.2009 to the ld AO (page 51) ; letter dated 14.12.2011 to the ld AO submitting the combined income of the assessee after amalgamation both under normal provisions as well as under section 115JB of the Act stating that there was no positive book profits to be taxed u/s 115JB at the combined entity level (pages 52 to 55) and income tax assessment order u/s 143(3) for AY 2009-10 (pages 56 to 61 ). The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. We have gone through in detail the contents of the paper book filed by the assessee. It would be relevant to reproduce the relevant clauses in the scheme of amalgamation as below:- Clause 10 - CONDUCT OF BUSINESS OF THE TRANSFEROR COMPANY With effect from the Appointed Date and upto the Effective Date: 10.3. All profits or income accruing or arising to the Transferor Company or expenditure or losses arising or incurred by the Transferor Company shall for all purposes be deemed to have accrued as the profits or income or expenditure or losses, as the case may be, of the Transferee Company. Cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the Mumbai Tribunal held that the merging company was entitled to prepare second set of accounts combining the book profits u/s 115JB of both companies as well as their unabsorbed losses and depreciation. 7.2. The ld AO observed that in the instant case , M/s HPLCL had merged with M/s HPL and that the company M/s HPLCL had ceased to exist since its date of merger and has dissolved. We find that the ld AO had accepted the fact that HPLCL is not in existence for the purpose of computation of income under normal provisions of the Act. But for the purpose of computation of book profits u/s 115JB of the Act, the ld AO deviates from his stand and states that M/s HPLCL continues to exist and have life ignoring the well settled legal principles and judicial precedents on the subject. We find 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 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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