2015 (3) TMI 507 - HC - Companies Law

Application for approval of Scheme of Amalgamation under section 391 & 394 of the Companies Act - Regional Director observation regarding compliance of As-14 issued by the ICAI , Individual benefits due to cancellation of inter investments including non compliance of AS-7 & As-9 , Non filing of Form 2 (Return of Allotment) & Form 66 (Compliance Certificate). Held that - In reply to regional director observations, it is submitted that since the Assessee Company is not engaged in the work of carrying out construction contracts and hence revised Accounting Standard-7 is not applicable and it is not bound to follow percentage completion method of accounting. Further, it has also been submitted that provisions of Accounting Standard-7 cannot override the provisions of section 145 of the Income Tax Act in so far as the computation of business income for the purpose of determining assessable income is concerned. It is further submitted that with respect to the Assessee Company, the provisions of Accounting Standard-9 shall be applicable. The Assessee Company has stated that it has been following aforesaid method of accounting on year to year basis. Further submitted that Transferor Company has already filed Form 2 with the Registrar of Companies in respect to Financial Year as on 31.03.2011 and a copy of the same has also been attached.Compliance Certificate under section 383A of the Act of Transferee Company with respect to Financial Year 2012-2013 is already filed and a copy of the same has been attached. In view of the approval accorded by the shareholders of the Petitioner Company, Representation/Report filed by the Official Liquidator and the Regional Director, Northern Region and the submissions of the Petitioner Company, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under Sections 391-394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law. - Scheme of Amalgamation approved.

Summary

Issues Involved:
Condonation of delay in filing report by Official Liquidator; Sanction of Scheme of Amalgamation under sections 391 & 394 of the Companies Act, 1956; Compliance with statutory requirements; Examination by Income Tax Authorities; Compliance with Form 2 and Form 66 under the Companies Act, 1956.

Condonation of Delay:
The Official Liquidator filed an application for condonation of delay in filing the report, which was not objected to by the Petitioner's Counsel. The delay was condoned, and the report was taken on record, leading to the disposal of the applications.

Sanction of Scheme of Amalgamation:
The joint petition sought sanction of the Scheme of Amalgamation under sections 391 & 394 of the Companies Act, 1956. Various details regarding the Petitioner Companies, including their incorporation, capital structure, and compliance with necessary resolutions, were provided. The Court had earlier dispensed with the requirement of convening meetings, and after due process, the Scheme was presented for sanction. Reports from the Official Liquidator and the Regional Director were favorable, and no objections were received. The Court granted sanction to the Scheme, directing compliance with statutory requirements.

Examination by Income Tax Authorities:
The Regional Director raised concerns regarding the allotment of shares at a premium and compliance with Accounting Standard-14. The Petitioner Companies responded, stating their position on accounting standards and the liability for any tax payments. The Court allowed the Income Tax Authorities to assess the companies' income for a specified period and examine the share allotment issue, with the Transferee Company being liable for any tax liabilities.

Compliance with Form 2 and Form 66:
The Regional Director pointed out non-compliance with Form 2 and Form 66 under the Companies Act, 1956 by the companies. The Petitioner Companies responded, providing evidence of compliance with the required forms for the respective financial years. The concerns raised by the Regional Director were addressed, and the Court directed the companies to comply with the provisions of the Act.

This detailed analysis covers the key issues addressed in the judgment, including the condonation of delay, sanction of the Scheme of Amalgamation, examination by Income Tax Authorities, and compliance with statutory requirements under the Companies Act, 1956.