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TMI Blog2020 (12) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Authority and the Appellate Authority failed to appreciate that by virtue of merger and amalgamation having been done under Sections 391 and 394 of Indian Companies Act, tax benefits and exemptions that were available to Transferor Company would also enure to the Transferee Company i.e. Revisionist. The Hon'ble Supreme Court in M/s Dalmia Power Ltd. and another vs. Assistant Commissioner of Income Tax Circle 1, Trichy, [ 2019 (12) TMI 991 - SUPREME COURT ] has considered the consequences of merger of two Companies on the basis of an approved Amalgamation Scheme - The Supreme Court made these observations in a case where revised Income Tax Returns were rejected by the Department on merger of the transferor and transferee Company. The Supreme Court relied upon its observations in MARSHALL SONS AND COMPANY (INDIA) LIMITED VERSUS INCOME-TAX OFFICER [ 1996 (11) TMI 6 - SUPREME COURT ] to observe that pursuant to the Scheme of Arrangement and Amalgamation, the assessment of the transferee Company must take into account the income of both the transferor and transferee Companies - It was observed that filing of revised returns by the transferee Company was not because of any om ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd realise a tax on entry of goods specified in the Schedule into a local area for consumption, use or sale therein, from any place out of the local area at such rate not exceeding 5% of value of goods as specified by the State Government by notification. Different rates may be specified in respect of different goods or different class of goods. The State Government may by notification amend the Schedule and also by notification exempt certain goods from levy of Entry Tax. 6. Under Rule 5(1) of the Rules of 2008, a declaration regarding proof of payment of tax referred to in sub section 3A of Section 4 of the Act shall be made in Form D, and the same Form D shall be utilized also for the purpose of claiming exemption from payment of Entry Tax. The State Government by a notification no. KA.NI.-2-320/XI-9(81)/97-U.P.Act-30-07-Order-(152)-2016 dated 3.3.2016 (hereinafter referred to as exemption notification dated 3.3.2016) has exempted sugar manufactured during Crushing Season 2015-16 by a Sugar Mill established in U.P. from levy of Entry Tax subject to following conditions (i) The manufacturer Sugar Mill shall issue a certificate prescribed by the Commissioner Commercial Taxes to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the order of Delhi High Court dated 26.2.2016, relevant paragraphs of which are being quoted hereinbelow 15. To be noted, the scheme in clause 4.2(k) provides that all employees of transferor companies, in service on the effective date, shall become the employees of the transferee company, on such date without any break or interruption in service and on terms and conditions as to remuneration not less favorable than those subsisting with reference to the transferor companies, as on the said date. 16. In terms of the provisions of Section 391 and 394 of the Act, and in terms of the scheme the entire undertaking, properties, rights and powers of the transferor companies, will stand transferred to and/or vest in transferee company, without any further act or deed. Similarly, in terms of the scheme, all liabilities and duties of the transferor companies shall stand transferred to transferee company, without any further act or deed. 17. Furthermore, as per clause 4.12 of the scheme, the transferor companies shall stand dissolved without being wound up. 11. It is case of Revisionist that M/s. Ritesh Vyaapar Ltd. was also engaged in purchase and sale of cane sugar from M/s. Bajaj Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of such sugar to M/s. Ritesh Vyaapar Ltd. have been also filed before this Court and were also filed before the Assessing Authority at the time of consideration of Revisionist's application for issuance of blank Form D. For some quantity of sugar sold by M/s. Ritesh Vyaapar Ltd. before its merger with the Revisionist, M/s. Ritesh Vyaapar Ltd. had asked the Department to issue Form D, which has been issued, but 3,32,969 quintals of sugar was leftover for the year 2015-16, which stood transferred along with other assets of Company on its merger with the Revisionist on 1.4.2016. It was for this leftover stock that the Revisionist had made the application dated 27.2.2018 along with copy of order of High Court of Delhi dated 26.2.2016. The Assessing Officer clearly could not understand the meaning of merger/amalgamation and treated the Revisionist as subsequent purchaser of sugar stock of M/s. Ritesh Vyaapar Ltd. and in his order rejecting such application, referred to the fact that petitioner could not produce any documentary proof/certificate issued by M/s. Ritesh Vyaapar Ltd. in its favour while transferring the sugar stock as was the prerequisite condition under exemption no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate as per exemption notification of 2016 in favour of revisionist, secondly it observed that the appellant had failed to prove that sugar stock which was transferred before 1.4.2016 was of that sugar which was manufactured during Crushing Season 2015-16 and not of any other previous year. 19. It has been submitted that first reason mentioned for rejection of Second Appeal by Tribunal has resulted from a very clear misunderstanding of Amalgamation Scheme and the order of the High Court dated 26.2.2016 and the second reason for rejection of Second Appeal cannot also be sustained because sugar being a perishable edible commodity all sugar stock that is manufactured is stamped with specific manufacturing date mentioned on packaging. Bajaj Hindustan Sugar Mill had issued sale certificate in terms of Exemption Notification and then Form K was issued to M/s. Ritesh Vyaapar Ltd. and the stock was checked and certificate produced was for Crushing Season 2015-16. 20. Counsel for Revisionist has argued that the Revisionist is facing great difficulty as some of stock of sugar transferred to it by M/s. Ritesh Vyaapar Ltd. has in fact been sold by Revisionist to 360 dealers. This sugar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the quantity of remaining stock, but only refers to the value of such stock. The value mentioned in Para 4 of such order is same value of remaining stock of sugar for which Form D was prayed for from the department, and for which Form K was submitted by M/s. Ritesh Vyaapar Ltd. before the Assessing Officer and which was accepted by the Assessing Officer in his orders dated 25.3.2019 and 22.10.2019. 24. This Court has carefully gone through entire documentary evidence which was before the Assessing Officer and which has been filed as annexures to this Revision. This Court while admitting Revision has framed following questions of law i. WHETHER the action of the Respondents in not issuing FORM-D in favour of the Revisionist after approval of the scheme of amalgamation by the Hon'ble High Court of Delhi vide order dated 26.02.2016 in Company Petition No. 631 of 2015 under the provisions of Section 391 and 394 of the Indian Companies Act, is legal and justified on the part of the Respondent authorities ? ii. WHETHER the action of the Respondents in not issuing FORM-D in favour of the petitioner is justified particularly when it infringes the exemptions granted by the State Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inued to exist then the sugar stock it had remaining on 1.4.2016 would have been entitled to exemption from Entry Tax. If such stock being in possession of M/s. Ritesh Vyaapar Ltd. was entitled to exemption from Entry Tax then such stock on being transferred on the acquisition of company by the Revisionist would also be entitled to such exemption being manufactured in the Crushing Season 2015-16 and being bought from same manufacturer M/s. Bajaj Hindustan Sugar Mills in the same Assessment Year. 29. This is a classic case of Tax Authorities ignoring documentary evidence already in their possession while assessing a Company which was merged with the Revisionist. The import of Delhi High Court's order dated 26.2.2016 was also ignored altogether. It seems that the left hand does not know what the right hand is doing. The Assessing Authority accepted the very same documents when produced by M/s. Ritesh Vyaapar Ltd. showing that sugar which it had bought from M/s. Bajaj Hindustan Sugar Mill Ltd. was of the Crushing Season 2015-16 but inexplicably, the same Assessing Authority refused to accept same documentary evidence when produced by the Revisionist. 30. The action of respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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