2013 (2) TMI 128 - HC - Income Tax

Scheme of amalgamation - transferor company challenge notice u/s 142(1) as it no longer survives & the question of assessing such company for the purpose of income tax would not possible - appointed date v/s effective date - Held that - As it emerges from the record that the transferor company had merged in transferee company with effect from 1.4.09. The High Court did not provide for any modification in the appointed date as envisaged in the merger scheme itself. In that view of the matter, as held by the Supreme Court in the case of Marshall Sons and Co. (India) Ltd v. I.T.O., 1996 (11) TMI 6 - SUPREME COURT the effective date for amalgamation would be the date as envisaged under the scheme. Thus no hesitation in holding that the transferor company would no longer be amenable to assessment proceedings for the assessment year 2010-11. The notice for producing documents for such assessment would, therefore, be invalid. Reference of the Revenue to clause 6 of the scheme is wholly misplaced. Clause 6 refers to two dates, namely, appointed date and the effective date. It only clarifies that the scheme shall be operative from the appointed date, but shall become effective from the effective date. This, in our opinion, does not alter the position of law - against revenue.

Summary

Issues:
Challenge to notice under section 142(1) of the Income Tax Act, 1961 for assessment year 2010-11 post amalgamation.

Analysis:
The petitioner challenged a notice issued by the respondent under section 142(1) of the Income Tax Act, 1961, for the assessment year 2010-11. The notice was directed to a company that was part of an amalgamation scheme with another company. The High Court had sanctioned the amalgamation scheme without modifying the appointed date, which was set as 1.4.2009. The petitioner argued that since the transferor company no longer existed post-amalgamation, it should not be subject to assessment proceedings. The petitioner relied on a Supreme Court decision which emphasized that the date of amalgamation/transfer specified in the scheme should be considered as the effective date, unless modified by the court. The court agreed with the petitioner's argument, stating that the transferor company was no longer liable for assessment for the year 2010-11 post-amalgamation. The court found the notice invalid and quashed it, ruling in favor of the petitioner.

In conclusion, the court allowed the petition, quashed the impugned notice, and made the rule absolute. The court held that the transferor company was no longer subject to assessment proceedings for the assessment year 2010-11 following the amalgamation. The court emphasized that the appointed date for the scheme was 1.4.2009, as approved by the High Court, and the notice issued by the respondent was deemed invalid. The court's decision was based on legal principles established by the Supreme Court regarding the effective date of amalgamation specified in the scheme.