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2019 (8) TMI 734

..... CALCUTTA HIGH COURT] the Court examined the effect of amalgamation and it was held that the entire capital and assets of the transferor-companies having vested in the assessee, as a result of the said amalgamations, the assessee became the sole owner of the capital of the transferor-companies. There was, therefore, no extinguishment of the right of the assessee in participating in the capital on the liquidation of the transferor-companies. The share held by the assessee in the transferor-companies represented the capital invested by the assessee in the said companies and by the said amalgamation the assessee became the sole owner of the entire capital of the transferor companies. By virtue of the said amalgamations the assessee as the transferee-company became the sole repository of all the rights which flowed from or were embedded in the shares held by the assessee in the transferor-companies. For all the above reasons it was held that, there was not extinguishment of any right of the assessee as holder of the shares in the transferor-companies. The CIT(A) while allowing the appeal filed by the assessee and rightly held that the assets in respect of which relief was allowed u/s 32 .....

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..... stion of law - Tax Case Appeal No. 1010 of 2008 - 10-7-2019 - Mr. Justice T. S. Sivagnanam And Mrs. Justice V. Bhavani Subbaroyan For the Appellant : Mr. M. P. Senthil Kumar For the Respondent : Mr. T. R. Senthil Kumar Senior Standing Counsel JUDGEMENT T. S. SIVAGNANAM, J. This Tax Case Appeal by the assessee, filed under Section 260- A of the Income Tax Act, 1961, ('the Act' for brevity) is directed against the order passed by the Income Tax Appellate Tribunal, Madras D Bench, Chennai in I.T.A No.1736/Mds/94, dated 31.08.2007 for the assessment years 1991-92. 2.The above Tax Case Appeal has been filed raising the following substantial questions of law:- "1. Whether the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the deduction granted u/s 32AB had to be withdrawn since the appellant was amalgamated with its parent company M/s.L. G.Balakrishnan & Bros.Ltd.? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the amalgamation of company would amount to otherwise transferred the assets of the company for the purpose of section .....

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..... that there was no contradiction of Section (155)(4)A and/or Section 32A(5) on constitution of a new firm comprising of all the partners of the original firm and widow of deceased partner, as there was no transfer on dissolution of old firm; there was no reason for invoking Section 155 also for the reason that the amount which had been credited to the reserve had been utilised by the old firm for purchase of new machinery within the period allowed by law. In the said decision the court referred to the law laid down by the Supreme Court in the case of Malabar Fisheries Co. Vs. CIT reported in [(1979) 120 ITR 49 (SC)], wherein the Court held that development rebate is not liable to be withdrawn in the event of dissolution of firm and distribution of assets among the partner, as no transfer of assets is involved. 8. In Shaw Wallace & Co.Ltd. Vs. Commissioner of Income Tax reported in [(1979) 119 ITR 0399(Cal], the Court examined the effect of amalgamation and it was held that the entire capital and assets of the transferor-companies having vested in the assessee, as a result of the said amalgamations, the assessee became the sole owner of the capital of the transferor-companies. T .....

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..... isions, in our view was rightly understood by the CIT(A) while allowing the appeal filed by the assessee and rightly held that the assets in respect of which relief was allowed under Section 32AB of the Act are still held by the amalgamating company even after amalgamation and gets fused by one company. 13. Apart from the above, we find from the order passed by the Company Court in C.P.No.21 and 22 dated 19.04.1991, specific clause has been inserted in the order covering the allowance reserve which reads as follows: (f) It is specifically agreed that the Development Rebate Reserve, Investment allowance Reserve, General Reserve, Capital Reserve and Investment deposit account of CIL, immediately prior to the appointed date will, as a result or the amalgamation, retain their identity and will become part of the Development Rebate Reserve, Investment allowance Reserve, General Reserve, Capital Reserve and Investment Deposit account of LGB respectively on and from the appointed date. 14. In the light of the above, the Tribunal fell in error in reversing the decision of the CIT(A). Accordingly, substantial question of law nos.1 and 2 are answered in favour of the assessee. Consequently, .....

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