1978 (7) TMI 42 - HC - Income Tax

Summary

Issues Involved:
1. Competency of United Industrial Bank Ltd. to file appeals for refunds due to Southern Bank Ltd.
2. Interpretation of the term "assessee" under the Indian Income-tax Acts of 1922 and 1961.
3. Applicability of Section 45 of the Banking Companies Act, 1949, in the context of tax liabilities and rights post-amalgamation.
4. Procedural correctness of the appeals filed by United Industrial Bank Ltd. on behalf of Southern Bank Ltd.

Issue-wise Detailed Analysis:

1. Competency of United Industrial Bank Ltd. to File Appeals:
The primary issue was whether United Industrial Bank Ltd. was competent to file appeals for refunds due to Southern Bank Ltd. under the Income-tax Acts. The Tribunal found that Southern Bank Ltd. was the original assessee and that it had filed the returns and was entitled to refunds. However, due to the amalgamation, United Industrial Bank Ltd. assumed all liabilities and rights, including the right to continue legal proceedings. The Tribunal held that United Industrial Bank Ltd. was an assessee within the meaning of Section 2(2) of the Indian Income-tax Act, 1922, and Section 2(7) of the Income-tax Act, 1961, thereby making it competent to prosecute the appeals.

2. Interpretation of the Term "Assessee":
The term "assessee" was crucial in determining whether United Industrial Bank Ltd. could file appeals. Under Section 2(2) of the Indian Income-tax Act, 1922, and Section 2(7) of the Income-tax Act, 1961, an assessee includes any person in respect of whom any proceeding under the Act has been taken for the assessment of income, loss, or refund. The Tribunal found that Southern Bank Ltd. continued to be an assessee even after the amalgamation, and by extension, United Industrial Bank Ltd. became an assessee due to its assumption of Southern Bank Ltd.'s liabilities and rights, including tax liabilities.

3. Applicability of Section 45 of the Banking Companies Act, 1949:
Section 45 of the Banking Companies Act, 1949, played a significant role in this case. The scheme of amalgamation under this section transferred all assets and liabilities of Southern Bank Ltd. to United Industrial Bank Ltd. The Tribunal noted that this statutory scheme had an overriding effect, enabling United Industrial Bank Ltd. to continue all pending proceedings, including those related to tax assessments and refunds. This interpretation was supported by Sub-section (14) of Section 45, which states that the provisions of this section and any scheme made under it shall have effect notwithstanding anything to the contrary in any other law.

4. Procedural Correctness of the Appeals:
The procedural correctness of the appeals filed by United Industrial Bank Ltd. on behalf of Southern Bank Ltd. was also scrutinized. The AAC had initially dismissed the appeals on the ground that United Industrial Bank Ltd. was not an assessee and therefore not competent to file the appeals. However, the Tribunal found that the appeals were indeed filed by Southern Bank Ltd., and the memoranda of appeals were signed by the general manager of United Industrial Bank Ltd. The Tribunal held that under the Income-tax Rules, 1962, the form of appeal could be signed by any person competent to act on behalf of the assessee. Therefore, United Industrial Bank Ltd. was legally competent to act on behalf of Southern Bank Ltd. post-amalgamation.

Conclusion:
The High Court affirmed the Tribunal's decision, holding that United Industrial Bank Ltd. was an assessee within the meaning of the relevant sections of the Income-tax Acts and was competent to file appeals for refunds due to Southern Bank Ltd. The Court found no merit in the revenue's objections and answered the referred question in the affirmative, in favor of the assessee. The assessee was entitled to costs of the reference, certified for two counsel.