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TMI Blog2019 (7) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... been statutorily provided under sections 230-234 of the Companies Act, 2013 and therefore, it is open to the applicant-companies to avail the benefits extended by statutory provisions and the Rules. Upon considering the approval accorded by the members and creditors of the petitioner-companies to the proposed scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, the report of official liquidator and the report of the Income-tax Department there appears to be no impediment in sanctioning the present scheme - Consequently, sanction is hereby granted to the scheme under sections 230 to 232 of the Companies Act, 2013. Petition disposed off. - Company Petition No. (CAA)- 35 (PB) of 2018. - - - Dated:- 14-1-2019 - M. M. KUMAR C. J. (Retd.) (President) and S. K. MOHAPATRA Technical Member Aashik Middha , Pradeep Khurana and Hardev Singh , Practising Company Secretary for the petitioner. C. Balooni , Company Prosecutor for the Regional Director (NR), Delhi. Easha Kadian for Income-tax. Rohit Saroj and Amish Tondon for the Official Liquidator, Delhi. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to the date of hearing of the petition. Further, the affidavit also discloses that copies of petition have been duly served to the Registrar of Companies, Regional Director, Northern Region, official liquidator and Income-tax Department in compliance with the order and in proof of the same acknowledgment made by the respective offices have also been placed on record. In addition both the petitioners have also filed affidavits dated June 4, 2018 to the effect that the petitioners and their representatives have not received any objection against the scheme. 7. The Regional Director has filed its representation dated June 8, 2018 in which it is submitted that as per the scheme the authorized capital of the transferor company shall stand added without any further act or deed. It is stated that the petitioner-companies may be directed to furnish a verified statement regarding fee payables, if any, for addition of the authorized share capital of the transferor company with that of the transferee company along with an undertaking for payment of fee. 8. Further, it has been pointed out that as per clause 17.6 of the scheme, fractional shares arising out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance-sheet of the transferor company. 12. It is contended in the report that on query raised about this matter it has been informed by the petitioners that the transferor company had entered into a contract for sale of property which consists of land and building under construction against which the company has received advance. Subsequently, the said contract was not executed as party was not paying the sale consideration and consequently, the company has forfeited the advance of ₹ 7.50 crores in accordance with the terms of contract. Accordingly it is contended that the said land value has been reduced to Nil and the land has not been shown in the balance-sheet on and after March 31, 2014. It has been also submitted that the said land has been purchased on July 31, 2007 at a consideration of ₹ 3,22,59,069 and ₹ 7.50 lakhs on account of earnest money towards contract for sale of said land was received during December 1, 2011 to December 13, 2011. 13. Further, the transfer company has received ₹ 9.25 crores as a security deposit from M/s. Haldiram Products P. Ltd., for the construction of building on said land. Therefore, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that : (i) Reply to point No. 4(i). -The losses of the transferor company may be adjusted with the income of the transferee company as per the provisions of the Income-tax Act, 1961. In case of any liabilities arises on behalf of transferor and transferee company, the same shall be paid by transferee company as per the provisions of the Income- tax Act, 1961. (ii) Reply to point No. 4(ii) .-The approval of the scheme shall not affect the tax treatments of the transactions under the Income-tax Act, 1961 or any other applicable taxing statute. Further, the sanction of the scheme or the effect thereof shall not serve as a defence for applicant-company No. 1. 20. Needless to say, that the scheme should not be a device to evade law and to promote tax evasion. The scheme will be against the public interest in case the purpose of amalgamation is only to transfer capital asset to escape capital gain tax. Therefore, it is clarified that the present scheme of amalgamation will not come in the way of the Income-tax Department to proceed against the transferee company or any other entity in case there is any tax evasion, or violat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), I. T. A. No. 1263 of 2011 (copy is enclosed for your reference as annexure 2), the hon'ble Supreme Court in the case of Travancore Rubber and Tea Co. Ltd. v. CIT [2000] 243 ITR 158 (SC) and section 51 of the Income-tax Act which is going reproduced as under : If the owner of an asset has received advance money or other money by forfeiting the said amount relating to the asset, this amount will be deducted from : (a) The written down value in case of depreciable assets, or (b) The cost of acquisition of the asset, or (c) The fair market value of the asset that will be taken as cost of acquisition as on April 1, 1981 if the asset was purchased before April 1, 1981 as the case may be, in computing the cost of acquisition. The company has reduced the cost of land and WIP of Building Cost by such forfeited amount. In view of above, the value of land has been reduced to nil in balance-sheet as on March 31, 2014 whereas the company is still in the possession of land and super structure thereon. Further, the applicability of the Income-tax at the time of adjust ment for forfeited am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government as specified under the provisions of section 133 of the Companies Act, 2013. 27. The share exchange ratio as provided in the scheme is as under : (a) 48 equity shares of ₹ 10 each of transferee company, credited as fully paid-up, for every 100 equity shares of ₹ 10 each of transferor company, shall be allotted to the shareholders of transferor company. Copy of the valuation report/share exchange ratio report prepared by P. R. Kumar and Co., Chartered Accountant has been placed on record. 28. The shareholders of the petitioner-companies are the best judges to protect their interest, fully conversant with market trends, and therefore, their decision should not be interfered with by the Tribunal for the reason that it is not a part of judicial function to examine entrepreneurial activities and their commercial decisions. It is well-settled that the Tribunal while evaluating the scheme of which sanction is sought under sections 230-232 of the Companies Act, 2013 will not ordinarily interfere with the corporate decisions of companies approved by shareholders and creditors. 29. In the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) That the transferor company shall stand dissolved without follow ing the process of winding up ; and (ii) That all the property, rights and powers of the transferor company, be transferred without further act or deed, to the transferee company and accordingly the same shall pursuant to section 232 of the Companies Act, 2013, be transferred to and vest in the transferee company. (iii) That all the liabilities and duties of the transferor company, be transferred without further act or deed, to the transferee company and accordingly the same shall, pursuant to section 232 of the Act, be transferred to and become the liabilities and duties of the transferee company ; and (iv) That all proceedings now pending by or against the transferor company, be continued by or against the transferee company ; and (v) That all the employees of the transferor company in service, on the date immediately preceding the date on which the scheme takes effect, i. e., the effective date shall become the employees of the transferee company on such date without any break or interruption in service and upon terms and condition not less favourab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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