TMI Blog1996 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... me of amalgamation, was amalgamated with the Travancore Rayon Limited. Every shareholder in the transferor company in respect of every share of Rs. 100 held by him was entitled as of right to claim and receive from the transferee-company (Travancore Rayons Ltd.) allotment of the following : (a) 7-3/4 equity shares of Travancore Rayons Ltd., of Rs. 10 each credited as fully paid-up ; and (b) One redeemable debenture of the transferee-company of Rs. 100 credited as fully paid-up at the time of merger by court. As the shareholder of the transferor-company, the assessee received 88,644 equity shares of Rs. 10 each and 11,438 debentures of Rs. 100 each, both of the Travancore Rayons Limited. In the assessment year 1975-76, the assessee represented that the above allotment of shares in terms of the scheme of amalgamation did not involve any transfer within the meaning of section 45 of the Income-tax Act, 1961, and hence it was not liable to any capital gains tax. The Income-tax Officer accepted the contention of the assessee and did not bring to tax any capital gains in his assessment order dated September 30, 1977. The Commissioner of Income-tax, while scrutinising the order, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts arising in this case and, therefore, no question need be referred raising the issue whether there is a transfer or not in the case of the assessee. Learned standing counsel, in order to support his case that the Tribunal has no jurisdiction to refer the question which was not sought for, relied upon a decision of this court rendered in E. I. D. Parry Ltd. v. CIT [1988] 174 ITR 11. In the abovesaid decision, this court held that the Tribunal was not competent to refer suo motu the question as to whether the surplus amounts in question were taxable as revenue receipts inasmuch as the Department had not sought for reference on that question which was decided against them. It remains to be seen that whenever any party is aggrieved over an order passed by the Tribunal, it is open to such aggrieved party to approach the Tribunal to refer a question of law said to arise out of the order of the Tribunal for the opinion of this court. Whether the question is to be referred or not is purely within the realm of the Tribunal. What kind of question is to be referred and in what manner it is to be framed is also purely the concern of the Tribunal. In the present case, the Department has filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him of any share or shares in the amalgamated company, and (b) the amalgamated company is an Indian company. The Tribunal following the decision of the Calcutta High Court in the case of Central India Industries Ltd. v. CIT [1975] 99 ITR 211 held that there is a transfer of capital asset in the case of the assessee. According to the Tribunal, the decisions in the case of CIT v. R. M. Amin [1977] 106 ITR 368 (SC) and in the case of Shaw Wallace and Co. Ltd. v. CIT [1979] 119 ITR 399 (Cal) and in the case of CIT v. Rasiklal Maneklal (HUF) [1974] 95 ITR 656 (Bom) are not applicable to the facts of the case. Our attention was drawn to a decision of the Supreme Court in the case of CIT v. Rasiklal Maneklal (HUF) [1989] 177 ITR 198. According to the facts arising in that case, on December 31, 1959, the respondent held 90 shares in one S Co. of the face value of Rs. 100 each. Pursuant to a scheme of amalgamation sanctioned by the High Court on November 25, 1960, whereunder, the holders of shares in the S Co. were to be allotted in the NS Co. one share of Rs. 125 each for two shares in the S Co. and the S Co. was to be dissolved, the respondent was allotted 45 shares in the NS Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had become useless or valueless and the Syndicate Bank Ltd. was struck off the register as required under section 394(1)(iv) of the Companies Act. And, thirdly, the assessee, as a member of the amalgamating company, the Syndicate Bank Ltd. was entitled to some shares, bonds, etc., from the I.C.D.S. which were neither in satisfaction of its rights nor as a consideration for the transfer. Therefore, the amalgamation of the Syndicate Bank Ltd. with the I.C.D.S. and the consequent allotment of shares, etc., by the I.C.D.S. to the shareholders of the Syndicate Bank Ltd. did not result in a transfer of a capital asset of the assessee for consideration within the meaning of section 2(47) so as to be chargeable to income-tax under the head 'Capital gains'. " The special leave petition filed against the abovesaid decision in CIT v. Master Raghuveer Trust [1985] 151 ITR 368 (Kar) was dismissed by the Supreme Court in Special Leave Petition (Civil) Nos. 4570 and 4571 of 1984, dated November 26, 1990. In the case of C. Leo Machodo v. CIT [1988] 172 ITR 744 (Mad) while considering the provisions of sections 2(47), 45, and 48 of the Income-tax Act, 1961, this court held, that (headnote) : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 2(47). In view of a letter from the Commissioner of Income-tax stating that the Department in a similar case belonging to the same group had accepted that where the assessees had received shares and bonds because of amalgamation there was no transfer within the meaning of section 2(47), it was held that in the present case also there is no transfer as contemplated under section 2(47) of the Act. Thus, according to the facts arising in that case, the Department accepted that whenever there is amalgamation of the two companies, there is no transfer and the question of levying capital gain tax does not arise. Thus, considering the facts arising in this case and the law on this aspect, we are of the opinion that the decision rendered by the Tribunal on the basis of the decision reported in Central India Industries Ltd. v. CIT [1975] 99 ITR 211 (Cal), is not sustainable. In the present case, inasmuch as shares and debentures were allotted to the assessee on account of the amalgamation of the two companies, it remains to be seen that there is no transfer or extinguishment of any right in allotting the shares and debentures in favour of the assessee as per the provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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