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TMI Blog2017 (5) TMI 1518X X X X Extracts X X X X X X X X Extracts X X X X ..... hi vide its order dated 30.05.2016 dispensed with the requirement of convening of the meetings of the equity shareholders, equity shareholders with differential rights and Unsecured Creditors of the transferor company No. 1; equity shareholders of the transferor company No. 2; equity shareholders and Unsecured creditors of the Transferee company. The transferor company No. 2 did not have any Secured Creditor or Unsecured Creditor. Hon'ble High Court further directed for convening of separate meetings of Secured Creditors of the Transferor Company No. 1 and the Transferee Company under its supervision for the purpose of considering and if thought fit, approving, with or without modification(s), the proposed Scheme of Arrangement. 2. In compliance of the order of Hon'ble High Court separate meetings of Secured Creditors of the Transferor Company No. 1 and the transferee company were duly convened and held on Saturday, 2nd July, 2016, in which the Scheme of Arrangement was unanimously approved and adopted in each of these meetings by creditors present and voting. 3. Under the circumstances, the petitioners have filed their joint petitions for sanction of the Scheme of Arrang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the respective offices have also been enclosed. 7. Additionally, the petitioners have also filed an affidavit before the Hon'ble High Court of Delhi dated 07.12.2016, that the petitioners herein nor their Legal Counsels had received any objection/representation against the proposed scheme of Arrangement till the date of such affidavit. The representation/affidavit of the Regional Director, NR, MCA dated 21.02.2017 has been placed before us. 8. We have heard the counsels for the petitioners and also considered the representation made by the Regional Director, Northern Region vide representation dated 21.02.2017. 9. Perusal of the above representation of the Regional Director as well as stressed at the time of oral hearing by the representative of the Regional Director, following points/observations predominantly come to the fore: i. That the Pr. Commissioner of Income-Tax, Delhi in relation to the letter dated 16.08.2016 of R.D. had responded vide letter dated 08.12.2016 through Income Tax Officer (Hqrs.), Pr. CIT-4, New Delhi enclosing a letter dated 02.12.2016 from Addl. Commissioner of Income Tax, Special Range-4, New Delhi which inter alia states as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to be paid with respect to the aforesaid returned income, has already been paid. The Petitioners also confirm that no Income tax is outstanding for payment for the Assessment year 2015-16, as on the date of this affidavit in the Petitioner Transferor and Transferee Companies. Separate Certificates from the Chartered Accountants confirming that the Petitioner Transferor and transferee Companies have made full payment of the Income-Tax for the Assessment Year 2015-16, are placed on record along with the reply as Annexure-1. 11. The petitioners also confirm that there are no disputed tax liability, towards income-tax, sales tax, or any government tax pending in relation to the Petitioner transferor Companies and transferee Company, except the cases which are under appeal/litigation, which it is represented will be paid as and when the same are decided by the concerned authorities. It is also represented that any pending cases which are part of the Demerged Undertakings, if any, will be de-merged without prejudice to any party to such appeal/litigation. The same will be paid by the concerned Company as per the applicable provisions of law. It has been submitted that the Scheme of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree significant aspects come to the fore; namely:- i) The Scheme contemplates de-merger of the demerged undertakings and the continuation of the corporate entities; ii) The Scheme in view of the demerger of the demerged undertakings contemplates reduction of capital of the concerned companies; iii) The Scheme also envisages creation of share premium account arising out of demerger. The accounting treatment contemplated under the Scheme is brought out in clause 4 of the Scheme which are reproduced hereunder:- ACOUNTING TREATMENT 4.1 Upon the Scheme becoming effective, De-merger of respective Investments Business (Demerged Business 1 & 2) of the Transferor Companies No. 1 & 2 into the Transferee Company, will be accounted in the following manner: 4.1.1 In the books of the Transferor Companies No. 1 & 2, respectively. a. All the assets and liabilities pertaining to the Demerged Business 1 & 2 (difference between the assets and liabilities hereinafter referred to as "Net Assets"), which cease to be the assets and liabilities of the Transferor Companies No. 1 & 2, respectively, will be reduced from the books of accounts of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets") pertaining to the Demerged Business 3 vested in it pursuant to this Scheme, at the respective book values as appearing in the books of the Transferee Company, as on the Appointed Date. d. The Transferor Company No. 1 shall credit to the Share Capital Account, in the books of accounts, the aggregate face value of the new Equity Shares issued by it to be Shareholders of the Transferee Company, pursuant to clause 3.2.1 of this Scheme. e. Any difference between the Net Assets and the aggregate face value of new Equity Shares issued, shall be credited to the Capital Reserves or debited to Goodwill Account, as the case may be, in the books of the Transferor Company No. 1 15. Despite the elaborate Accounting Treatment contemplated as above and also taking into consideration the complexity of the Scheme, we do not, from the paper books filed before us are in a position to ascertain that the Certificate from Company's Auditor as contemplated under proviso to Section 230(7)/proviso to Section 232(3) regarding compliance with Accounting Standards have been produced. 16. The auditors who have certified the financial statements for the year ended 31.03.2015 it is see ..... X X X X Extracts X X X X X X X X Extracts X X X X
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