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TMI Blog2016 (4) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... ong term loan and advances or cash, which is shown in the assets side of the balance sheet. 9.1 Even as per the RD, the petitioner company had no accumulated loss on the date of the preparation of the provisional balance sheet. As to the observation of the RD, that the reduction in share capital is being sought to distribute brought forward profits of the petitioner company, to escape payment of tax on distribution of profits, is an observation which is not backed by any relevant provision of the Income Tax Act, 1961. As a matter of fact, because such an observation had been made by the RD in his reply/ affidavit, the matter was re-listed in court for directions on 29.03.2016. Consequent thereto, an affidavit dated 31.03.2016 has been fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, notice was issued to the Regional Director (in short the RD), which was accepted by Mr Atma Sah, Asstt.ROC. Direction was also issued for serving a copy of the petition on the Registrar of Companies (in short the ROC), within one week of that date. In addition thereto, the petitioner company was directed to carry out publication in the Indian Express (English) and Veer Arjun (Hindi). 2.2 Since then, the petitioner company has filed an affidavit dated 19.11.2014 demonstrating publication in the two newspapers referred to above. The RD has also filed its reply/ affidavit which takes into account the response of the ROC. 3. This petition has, thus, been filed in the background of the following facts: 3.1 The petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtracted hereinbelow: .....RESOLVED THAT pursuant to the provisions of Section 78 read with Sections 100 to 104 and other applicable provisions, if any, of the Companies Act, 1956, read with Article 6A of the Articles of Association of the Company and pursuant to the relevant provisions of the Companies (Court) Rules, 1959 and subject to the confirmation of the Hon'ble High Court of Judicature at New Delhi (High Court) and other appropriate authorities, if any, in this regard, the Issued and Paid up Capital of the Company as on October 31, 2013 be reduced from ₹ 49,00,000/(Rupees Forty Nine Lac only) to ₹ 11,28,520 (Rupees Eleven Lac Twenty Eight Thousand Five Hundred Twenty only). And that such reduction to be ut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) That Article 6A, as referred to in the petition, based on which the petitioner company averred that it had the power to reduce the share capital, did not find mention in its Articles of Association. It is further averred that, though, the petitioner company had filed a special resolution regarding alteration in its Articles of Association with the ROC, on 28.01.2014, the said alteration was not found noted in the certified true copy of the Articles of Association enclosed with the petition. According to the RD, there was, prima facie, a violation of Section 15(1) of the Companies Act, 2013 (in short the 2013 Act). (ii) That reduction in the share capital from ₹ 49,00,000/- to ₹ 11,28,520/- is to be effected by writing off l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by writing off long term loan and advances and cash as shown on the assets side of its balance sheet. Furthermore, the petitioner company denied that the reduction of share capital was sought to be brought about so as to distribute its brought forward profits in order to escape payment of tax on distribution of profits. It is asserted by the petitioner company that the brought forward profits are after tax profits. 6. Mr Awnish Kumar, learned counsel for the petitioner company, and Ms Aparna Mudiam, Asstt. ROC, made their submissions, broadly, in line with their respective pleadings in the matter. 7. A perusal of the record and the submissions made before me would clearly demonstrate that the petitioner company seeks reduction of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it would be effecting reduction in share capital either by writing off its long term loan and advances or cash, which is shown in the assets side of the balance sheet. 9.1 Even as per the RD, the petitioner company had no accumulated loss on the date of the preparation of the provisional balance sheet. 9.2 As to the observation of the RD, that the reduction in share capital is being sought to distribute brought forward profits of the petitioner company, to escape payment of tax on distribution of profits, is an observation which is not backed by any relevant provision of the Income Tax Act, 1961. As a matter of fact, because such an observation had been made by the RD in his reply/ affidavit, the matter was re-listed in court for direc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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