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TMI Blog2019 (9) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... the scheme. Where in a given case the liability has arisen or would arise or the demand would be raised against the Transferor Company for the relevant period after due scrutiny, assessment, review or determination through a due judicial process and the Transferee Company undertakes to make payment of all outstanding tax dues as determined in the aforesaid manner, the scheme cannot be refused and has to be allowed. The Scheme having been approved and sanctioned and the same being in consonance with law, no fault can be found with the Transferee s undertaking to satisfy all demands raised by the tax authorities as finally determined by due process. The Appellants are justified in maintaining that the tax liabilities would be satisfied by the Transferee as determined by the competent forum seised of the matter in accordance with the approved Scheme which admittedly does not come in conflict with any express provision of the Companies Act, 2013. The legitimate interests of the concerned Tax Authorities have been lawfully protected and their right to recover the tax dues as determined by ITAT or any other competent forum as the case may be, remains intact. While the Scheme of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exception has been taken by the Appellants may be reproduced as under:- (10) b. In case of Income Tax, a sum of ₹ 19,88,24,680/- is due for the financial year 2010-11 to 2016-17 and amount deposited in protest is only ₹ 1,75,00,000/- and presently is pending before the Commissioner of Income Tax Appeals. The Transferor Company is directed to pay the entire outstanding dues, i.e., ₹ 18,13,24,680/- (An Amount of ₹ 1,75,00,000 which was paid in protest is subtracted from the original amount, ₹ 19,88,24,680/-) to the Commissioner of Income Tax Appeals-1, Bangalore and Service Tax outstanding amount of ₹ 86,81,439/- to the competent Authorities. The appropriate refund amount as may be, on finality, can be transferred to the Transferee Company. 3. Learned counsel for the Appellants submitted that the demand as raised by the Income Tax and Service Tax Authorities has not yet crystallized, same being challenged by the Transferor Company before the competent Appellate Tribunals where the adjudication is underway. It is further submitted that the demand emanating from the Income Tax Authorities initially at ₹ 19,88,24,680/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Tribunal dated 3rd May, 2019. 5. In their reply affidavit Respondent Nos. 3 and 4 pleaded that there are outstanding tax dues against the Transferor Company as per following details:- i. Office of DCIT, Circle 1(1)(1), Bangalore Ad2Pro Media Solutions Pvt. Ltd. (PAN AAFCA9418A) AY Demand Payment Balance 2012-13 Nil 2013-14 6,22,800 6,22,800 0 2016-17 5,36,67,417 15,00,000 5,21,67,417 On an application made before Pr. CIT, Bengaluru I an installment scheme has been granted on 5th March, 2019 to make payment of 20% of the demand in installments of ₹ 15 Lakhs by the 15th of each month. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the event of a scheme of arrangement/merger/amalgamation the Tax Authorities right to recover the outstanding tax dues must remain intact. Once a scheme has been sanctioned by a Tribunal in accordance with law, as admittedly in the instant case it is and the same goes unassailed, nothing precludes the Tax Authorities from recovering its legitimate and recoverable outstanding tax dues from the Transferor or the Transferee Company, as provided in the scheme. Where in a given case the liability has arisen or would arise or the demand would be raised against the Transferor Company for the relevant period after due scrutiny, assessment, review or determination through a due judicial process and the Transferee Company undertakes to make payment of all outstanding tax dues as determined in the aforesaid manner, the scheme cannot be refused and has to be allowed. Reference can be made to the judgment rendered by the Hon ble High Court of Delhi in Company Petition No. 597/2014 reported in 2016 SCC Online Del 1135, para 45 whereof which is relevant for our purposes is reproduced as under:- 45. In response to the aforesaid objections, the transferee company in the affidavit dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1), Bengaluru. It appears that Respondent No. 4 has issued a No Objection Certificate (NOC) dated 24th September, 2018 raising no objection to the sanction of the Scheme, however, seeking to protect its legitimate interests by raising future demands as warranted. It is not disputed that in terms of affidavits sworn on 18th December, 2018 and 19th December, 2018 and filed before the Tribunal, the Transferee Company has undertaken to make payments in regard to the demand raised by the Income Tax and Service Tax Authorities upon the same becoming crystallized . The Transferor Company too has reiterated the same before the Tribunal. This is forthcoming from the record of the Tribunal to which reference has been made in the memos of appeals. Our attention has also been invited to clause 12.7 of the approved Scheme of Arrangement which eloquently states that post amalgamation all the tax assessment proceedings and appeals shall be continued with the Transferee Company and all or any dues payable in accordance with law shall be paid by the Transferee Company. Admittedly, proceedings are pending in appeal before ITAT and depending upon the outcome of such proceedings, the Transferee Com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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