2017 (3) TMI 1929 - HC - Income Tax

Taxability post scheme of merger - Recovery of tax statutorily due from the transferor or transferee company or any other person who is liable for payment of such tax due - HELD THAT - As decided in 2015 (8) TMI 475 - SC ORDER Income Tax Department is entitled to take out appropriate proceedings for recovery of any tax statutorily due from the transferor or transferee company or any other person who is liable for payment of such tax due. We accordingly dispose of the appeal recording that the Income Tax Department would be entitled to take out appropriate proceedings for recovery of any tax statutorily due from the transferor or transferee company or any other person who is liable for payment of such tax due. Needless to state if the Income Tax Department initiates any proceedings the respondents would be entitled to raise all issues and defences of law and facts.

Summary

Issues involved:
1. Delay of 2633 days in re-filing the appeal
2. Scheme of merger and Income Tax Department's entitlement to recover tax

Analysis:

Issue 1: Delay of 2633 days in re-filing the appeal
The Court noted a significant delay of 2633 days in re-filing the appeal. Despite finding the reasons for the delay not very convincing, the Court considered the default to be by the counsel. However, due to the consent of both counsels for the parties and to ensure disposal of the matter on merits, the Court allowed the application subject to just exceptions.

Issue 2: Scheme of merger and Income Tax Department's entitlement to recover tax
Regarding a similar scheme of merger, the High Courts had previously ruled against the Income Tax Department. The Supreme Court, in response to special leave petitions, dismissed the petitions but stated that the Income Tax Department could pursue appropriate proceedings for the recovery of any tax due from the involved parties. In the current case, the appellant requested a similar disposal of the appeal, which was agreed upon by the counsel for respondents. The Court disposed of the appeal by recording the Income Tax Department's entitlement to initiate proceedings for the recovery of statutorily due taxes. It was emphasized that if such proceedings were initiated, the respondents would have the right to raise all relevant issues and defenses of law and facts. No costs were awarded in this matter.

This comprehensive analysis covers the issues of delay in re-filing the appeal and the scheme of merger concerning the Income Tax Department's entitlement to recover tax as outlined in the judgment delivered by the High Court.