TMI Blog2016 (8) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, 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. - I.T.A No. 70/Kol/2014 - - - Dated:- 3-8-2016 - Shri M. Balaganesh, AM And Shri S. S. Viswanethra Ravi, JM For the Appellant: Shri Niraj Kumar, CIT, DR For the Respondent: Shri Harakamal Chakravorty, Sr. General Manager ORDER Per Shri M. Balaganesh, AM This appeal by revenue is arising out of order of CIT(A)-XII, Kolkata vide appeal No. 431/xii/12/11-12 dated 03.10.2013. Assessment was framed by DCIT, Circle-12, Kolkata u/s. 143(3) of the Income tax Act, 1961 (hereinafter referred to as the Act ) for AY 2009-10 vide his order dated 27.12.2011. 2. The only issue to be decided in this appeal is as to whether the book profits of the merged entity could be brought to tax in the facts and circumstances of the case. 3. The brief facts of this issue is that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Companies (ROC) on 19.10.2009. 3.1. The said HPLCL had filed its own return of income (i.e. as a separate entity) for the A. Y. 2009-10 on 24.09.2009 on stand alone basis. As per the said return, it had a gross total income of ₹ 25,70,79,700/- and the entire amount was deductible u/s 80IA of the Act. Therefore, the total income of HPLCL for the A.Y. 2009-10 was nil as per the normal provisions of the Act. Under section 115JB of the Act, HPLCL calculated tax of ₹ 34,29,654/- on a book profit of ₹ 3,02,70,551/-. As HPLCL had paid ₹ 2,06,00,000/- and ₹ 2,22,86,212/- as advance tax and TDS respectively it claimed refund of ₹ 3,94,56,558/- in its return of income. It is reiterated that the Income-tax returns for A.Y. 2009-10 were filed by both the companies on a standalone basis i.e. without considering the effect of the merger as on the last date for filing the return, the Form 21 was not yet filed with the ROC. Subsequent to the filing of the Form 21 with the ROC on 19/10/2009, the assessee wrote a letter to the Assessing officer of the HPLCL i.e. the Deputy Commissioner of Income Tax, Circle-8 Kolkata on 26/10/2009 informing of the developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HPLCL has to be considered on a standalone basis as profit u/s 115JB. 3.3. The assessee submitted that the Ld. A.O. grossly in assessing book profit of HPL u/s 115JB as ₹ 3,02,70,551/- based on the book profits of HPLCL as if it existed separately as an independent entity. As HPLCL had ceased to exist from 01/04/2008 it was incumbent on the part of the Ld. A.O. to consider a single income for the assessee. The Ld. A.O. has done this in the case of computation of income under normal provisions of the Income tax Act but not for the book profit u/s 115JB of the Act. The Income-tax Act does not contemplate that income under section 115JB of the Act in the hands of a single entity will have different treatment than that under normal tax computation. The Ld A.O. also erred in failing to appreciate that once a company merged into another from the effective date as pronounced by the High Court, it ceases to have any existence and consequently its income loses its separate character and so no separate treatment or segregation is possible during assessment. Income of the merging company arising prior to the date of the merger will be determined separately but assessed in the hands o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsciously disclosed the book profits tax in the return on standalone basis voluntarily which cannot be ignored but for the merger with effective date from 1.4.2008. Section 115JB starts with a non-obstante clause and that would override all other provisions of the Act and makes it independent of other provisions of law even if it is contrary to other provisions. In response to this, the ld AR argued that the process of merger gets completed only when the court order approving the merger is received and filed with the Registrar of Companies by filing of statutory Form No. 21 by paying appropriate fees. Only on intimation of the same, the assessee (merged entity) is entitled to take legal cognizance of the merger. Immediately on filing of the same, the assessee had duly intimated the fact of merger to the ld AO vide its letter dated 26.10.2009 filed on 27.10.2009 enclosing the copy of the court order approving the merger. 7. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee comprising of appeal memo together with its supporting documents (pages 1 to 22 ) ; amalgamation order approved by Hon ble Calcutta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pursuant to the merger, M/s HPLCL ceases to exist in the eyes of law. HPLCL had been given its legal death. The non-obstante clause in section 115JB of the Act has been incorporated only with a view to tax the book profits computed in accordance with Part II and III of Schedule VI of the Companies Act , 1956 and the book profits so computed shall be chargeable to tax at the prescribed rates , irrespective of existence of lesser profits or huge losses under normal provisions of the Act. We hold that the non-obstante clause would not tamper the legal death of HPLCL pursuant to the scheme of amalgamation approved by the Hon ble Calcutta High Court with effective date from 1.4.2008. We find that the Co-ordinate Bench decision of this Tribunal in the case of Pampasar Distillery Ltd vs ACIT reported in (2007) 15 SOT 331 (Kol) dated 28.2.2007 had held in Para 19 of its order that the AO can make the assessment of the income prior to the period of amalgamation of Pampasar Distillery Ltd in the hands of the successor company. In other words, the question of assessing the income of Pampasar Distillery separately after the period of amalgamation does not arise at all. We also find that the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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