2015 (3) TMI 114 - HC - Companies Law

Application for proposed Scheme of Arrangement under Section 391 & 394 of the Companies Act, 1956 - Objection from Income Tax Authorities - Addition of income matter pending with CIT(A) - Allow to collect future demand from the new companies - Held that - It is directed that Income Tax Department is permitted to restrain its resource for recovery of any existing or future tax liabilities of Demerged or Resulting Companies, under the proposed scheme irrespective of the sanction of the Scheme. The sanction of the Scheme would not affect the powers of the Income Tax Department for recovery, including imposition of penalties etc. as permissible under law, irrespective of the sanction of the scheme.It is clarified that the approval of the Scheme, would in no manner affect the tax treatments of the transactions under the Income Tax Act, 1961 or any other applicable taxing statute, nor would the sanction of the Scheme serve as a defence for the petitioners against tax treatment under the above mentioned statutes. In view of the approval accorded by the Shareholders of the Petitioner Company; representation/reports filed by the Regional Director, Northern Region, attached with this Court to the proposed Scheme of Arrangement, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement. Consequently, sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956.- Scheme of arrangement approved.

Summary

Issues:
1. Application for condonation of delay filed by the Regional Director.
2. Second motion joint petition under sections 391 & 394 of the Companies Act, 1956 for sanction of the Scheme of Arrangement.
3. Compliance with statutory requirements and approval of the Scheme of Amalgamation.

Analysis:
1. The judgment begins with an application for condonation of delay filed by the Regional Director, seeking approval for filing a report. The delay is condoned upon the submission of the petitioner's counsel, and the report is accepted.

2. The second motion joint petition under sections 391 & 394 of the Companies Act, 1956 is filed for the sanction of the Scheme of Arrangement involving multiple companies. Details regarding the incorporation, capital, and resolutions of the Petitioner Companies are provided. The court had earlier dispensed with the requirement of convening meetings of shareholders and creditors, and notices were duly issued and published as per the court's directions.

3. The Regional Director filed an affidavit/report raising concerns about the Scheme, specifically related to the transfer of employees and an income tax issue. The court directed the Income Tax Department to restrain its resource for recovery of tax liabilities under the proposed scheme. It was clarified that the approval of the Scheme would not affect tax treatments under applicable statutes, and the Resulting Companies would be liable for any arising liabilities.

4. No objections were received to the Scheme, and the court, after considering the shareholders' approval and reports filed by the Regional Director, granted sanction to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956. The Petitioner Company was instructed to comply with statutory requirements, and assets were directed to be transferred to the Resulting Companies as per the Scheme.

5. The order clarified that it did not grant exemption from stamp duty, taxes, or any other charges, and did not waive compliance with any other specific legal requirements. The petition was allowed in the terms mentioned, and a certified copy of the order was to be filed with the Registrar of Companies within 30 days.

This detailed analysis covers the issues addressed in the judgment, providing a comprehensive overview of the legal proceedings and decisions made by the court.