TMI Blog2019 (12) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... on Bench, and restore the judgment dated 30.04.2019 passed by the learned Single Judge. Accordingly, the Civil Appeals are allowed. The Department is directed to receive the revised Returns of Income for A.Y. 2016-2017 filed by the Appellants, and complete the assessment for A.Y. 2016-2017 after taking into account the Schemes of Arrangement and Amalgamation as sanctioned by the NCLT. - Civil Appeal Nos. 9496-99 of 2019 ( Arising out of SLP (C) Nos. 19678-681 of 2019 ) - - - Dated:- 18-12-2019 - UDAY UMESH LALIT And INDU MALHOTRA, JJ. For the Petitioner : Mr. S. Ganesh, Sr. Adv. Mr. Anand Sukumaran, Adv. Mr. S. Sukumaran, Adv. Mr. Bhupesh Kumar Pathak, Adv. Ms. Meera Mathur, AOR For the Respondent : Mrs. Anil Katiyar, AOR JUDGMENT INDU MALHOTRA, J. Leave granted. 1. The issue which arises for consideration in the present Civil Appeals is whether the Department ought to have permitted the assessee companies to file the revised Income Tax Returns for the Assessment Year 2016-2017 after the expiry of the due date prescribed under Section 139(5) of the Income Tax Act, 1961 on account of the pendency of proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany Petitions under Sections 391 to 394 of the Companies Act, 1956 before the Madras and Guwahati High Courts. On the coming into force of the Companies Act, 2013, the Company Petitions were transferred to NCLT, Chennai and NCLT, Guwahati. 2.6 The Schemes were duly approved and sanctioned by the NCLT, Guwahati vide Orders dated 18.05.2017 and 30.08.2017. NCLT, Chennai sanctioned the Schemes vide Orders dated 16.10.2017, 20.10.2017, 26.10.2017, 28.12.2017, 10.01.2018, 20.04.2018 and 01.05.2018. 2.7 The Appellants/ Transferee Companies manually filed revised Returns of Income on 27.11.2018 with the Department after the Schemes were sanctioned and approval was granted by the NCLT. The revised Returns were based on the revised and modified computation of total income and tax liability of the Transferor/Amalgamated Companies. In the revised Returns of Income, the Appellant No.1 claimed losses in the current year to be carried forward amounting to ₹ 2,44,11,837/; whereas Appellant No.2 claimed losses in the current year, to be carried forward, amounting to ₹ 1105,93,91,494/. 2.8 The Appellants submit that the revised Returns were file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants had belatedly filed their revised Returns without obtaining permission from the Central Board of Direct Taxes ( CBDT ) for condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961 read with CBDT Circular No. 9/2015 dated 09.06.2015. 2.13 On 28.12.2018, the Department passed an Assessment Order u/S. 143(3) of the Income Tax Act, stating that in view of the Scheme of Arrangement and Amalgamation, the notice issued under Section 143(2), and the assessment proceedings for A.Y. 2016-2017 had become infructuous with respect to Appellant No.2. 2.14 The Appellants filed Writ Petitions before the Madras High Court praying for quashing of the Order dated 05.12.2018, and for a direction to the Department to complete the assessment for A.Y. 2015-2016 and A.Y. 2016-2017 after taking into account the revised Income Tax Returns filed on 27.11.2018, as well as the Orders dated 20.04.2018 and 01.05.2018 passed by the NCLT, Chennai approving the Schemes of Arrangement and Amalgamation. 2.15 The learned Single Judge of the Madras High Court vide common Judgment and Order dated 30.04.2019 allowed the Writ Petitions filed by the Appellants, and quashe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT, while sanctioning the Schemes, clarified that the Appellants would be required to approach the relevant statutory authorities for obtaining necessary permissions and compliances. The Department did not consent to waive the procedures or statutory requirements prescribed under S.139(5) and 119(2)(b) of the Income Tax Act in respect of filing of revised Returns of Income. 2.17 The Department vide letter dated 11.07.2019 informed the Appellants that in case they fail to file the revised Returns before the expiry of the limitation period prescribed for completion of assessment in accordance with Explanation 1 to Section 153 r.w. Proviso (1) i.e. 60 days from the date of the impugned Judgment, the assessment for A.Y. 2016-2017 would be conducted on the basis of the original Returns filed by them. 2.18 The Appellants made a representation on 22.07.2019 stating that subsequent to the approval and sanction of the Scheme of Arrangement and Amalgamation, the income of the Transferor companies merged in the hands of the Appellants w.e.f. 01.01.2015, being the Appointed Date as the date of succession under S. 170 of the Act. Accordingly, the Appellants reque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xes paid/withheld etc. if any, as may be required consequent to implementation of this Scheme and where necessary to give effect to this Scheme, even if the prescribed time limits for filing or revising such returns have lapsed without incurring any liability on account of interest, penalty or any other sum. DCBL shall have the right to claim refunds, tax credits, setoffs and/or adjustments relating to its income or transactions entered into by it by virtue of this Scheme with effect from Appointed Date I and Appointed Date II, as applicable. The taxes or duties paid by, for, or on behalf of the Power Undertakings and Amalgamating Undertaking 1 relating to the period on or after Appointed Date I and Appointed Date II respectively shall be deemed to be the taxes or duties paid by DCBL, and accordingly DCBL shall be entitled to claim credit or refund for such taxes or duties. DPL [Appellant No.1] shall be entitled to, amongst others, file/or revise its income tax returns, TDS/TCS returns, wealth tax returns, service tax, excise duty, sales tax, value added tax, entry tax, cess, professional tax or any other statutory returns, if required, credit for advance tax paid, tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax paid, tax deducted at source, claim for sum prescribed under Section 43B of the Income Tax Act on payment basis, claim for deduction of provisions written back by Amalgamated Company and Transferee Company previously disallowed in the hands of Amalgamating Company and Transferor Company (relating to the Transferred Undertaking) respectively under the Income Tax Act, credit of tax under section 115JB read with section 115JAA of the Income Tax Act, credit of foreign tax paid/withheld, if any, pertaining to Amalgamating Company and Transferor Company (relating to the Transferred Undertaking) as may be required consequent to implementation of this Scheme and where necessary to give effect to this Scheme, even if the prescribed time limited for filing or revising such returns have lapsed without incurring any liability on account of interest, penalty or any other sum. Amalgamated Company and Transferee Company shall have the right to claim refunds, tax credits, setoffs and/or adjustments relating to the income or transactions entered into by them by virtue of this Scheme with effect from Appointed Date. The taxes or duties paid by, for, or on behalf of, Amalgamating Company and Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5), shall be sent to the NCLT within a period of thirty days from the date of receipt of such notice, and a copy of such representation shall simultaneously be sent to the concerned companies. In case no representation is received within thirty days, it shall be presumed that the statutory authorities have no representation to make on the proposed scheme of compromise or arrangement. Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 is set out here-in-under for ready reference: (3) If the authorities referred to under sub-rule (1) desire to make any representation under sub-section (5) of section 230, the same shall be sent to the Tribunal within a period of thirty days from the date of receipt of such notice and copy of such representation shall simultaneously be sent to the concerned companies and in case no representation is received within the stated period of thirty days by the Tribunal, it shall be presumed that the authorities have no representation to make on the proposed scheme of compromise or arrangement. [emphasis supplied] 4.5 The Department did not raise any objection within the stipulated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me presented to it - as has happened in this case - it should follow that the date of amalgamation/date of transfer is the date specified in the scheme as the transfer date . It cannot be otherwise. It must be remembered that before applying to the Court under Section 391(1), a scheme has to be framed and such scheme has to contain a date of amalgamation/transfer. The proceedings before the Court may take some time; indeed, they are bound to take some time because several steps provided by Sections 391 to 394-A and the relevant Rules have to be followed and complied with. During the period the proceedings are pending before the Court, both the amalgamating units, i.e., the Transferor Company and the Transferee Company may carry on business, as has happened in this case but normally provision is made for this aspect also in the scheme of amalgamation. It was further held that pursuant to the Scheme of Arrangement and Amalgamation, the assessment of the Transferee Company must take into account the income of both the Transferor and Transferee Companies. The Court observed as follows: 15. The counsel for the Revenue contended that if the aforesaid view is adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t relied on Section 139(5) and 119(2)(b) of the Income Tax Act r.w. Circular No.9 of 2015 issued by the CBDT to contend that the Appellant ought to have made an application for condonation of delay, and sought permission from the CBDT, before filing the revised Returns beyond the statutory period of 31.03.2018. The Appellants having belatedly filed their revised Returns on 27.11.2018, which was beyond the due date of 31.03.2018 for A.Y. 20162017, the assessment could only be done on the basis of the original Returns filed by the Appellants. 6. Section 139(5) of the Income Tax Act, as it stood at the relevant time, makes it clear that where an assessee furnishes a return under sub-section (1) or sub-section (4) of Section 139, and later discovers an omission or mistake therein, he may furnish a revised Return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Section 139(5) of the Income Tax Act is set out here-in-under for ready reference: 139(5). If any person, having furnished a return under subsection (1) or subsection (4) of Section 139, discover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut any objection from the Department. Rules of procedure have been construed to be the handmaiden of justice. Kailash v Nankhu (2005) 4 SCC 480; State of Punjab v Shamlal Murari (1976) 1 SCC 719 The purpose of assessment proceedings is to assess the tax liability of an assessee correctly in accordance with law. National Thermal Power Co. Ltd. v. Commissioner of Income Tax, (1997) 7 SCC 489. 10. Section 170(1) of the Income Tax Act, provides that the successor of an assessee shall be assessed in respect of the income of the previous year after the date of succession. S.170(1) of the Income Tax Act provides as under: 170. Succession to business otherwise than on death. (1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession, (a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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