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TMI Blog1990 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act, 1961, were not applicable to the applicant's case ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income-tax and surtax liabilities of the Syndicate Bank Ltd. which was amalgamated with the applicant company was not allowable as business expenditure in the computation of the total income of the applicant ?" The assessee-company, the Industrial Credit and Development Syndicate Ltd., Manipal, is the successor company to the Syndicate Bank Ltd. After the Syndicate Bank was nationalised in the year 1969, under the Banking Companies(Acquisition and Transfer of Undertakings Act) and after the banking business was taken over by the Government of India, the Syndicate Bank Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity as additional grounds. Both the Appellate Assistant Commissioner of Income-tax, Hassan Range, Hassan, and the Income-tax Appellate Tribunal rejected the first ground that a reference should have been made by the Income-tax Officer to the Inspecting Assistant Commissioner under section 144B taking into consideration the capital gains liability payable by the Syndicate Bank Ltd. This argument was based on the hypothetical claim made in respect of the capital gains liability of the predecessor-company. This claim was rejected on the ground that the liability to capital gains tax had not yet been ascertained and that, therefore, it was futile to urge that the Income-tax Officer should have referred the matter to the Inspecting Assistant C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decessor-company was quantified or not, we hold that this ground was rightly rejected by all the three authorities. Therefore, the first question is answered in the affirmative and against the assessee. The second question relates to the claim made by the assessee for deduction of the income-tax and surcharge liability of the Syndicate Bank Limited. Under clause 2(a) of the deed of amalgamation, all debts, liabilities and the obligations of the predecessor-company stood transferred to the transferee-company (assessee) pursuant to the provisions of section 394 of the Companies Act under which all the debts and liabilities of the transferor-company became the liabilities of the transferee-company. By virtue of clause (4) of the amalgama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenditure incurred by the assessee-company and had allowed the deduction following the provisions in section 40(a)(ii) of the Act. The second decision of the Punjab and Haryana High Court in Dashmesh Transport Co. Pvt. Ltd. v. CIT [1980] 125 ITR 681, was also relied upon by learned counsel for the Department. We are in respectful agreement with the reasons given by their Lordships. We agree with the finding and reasons given by the Appellate Tribunal in rejecting the claim of the assessee. It was rightly held that the liabilities arose to the assessee-company under the amalgamation scheme and not in the course of its business. In the result, the second question also is answered in the affirmative and against the assessee. - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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