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TMI Blog2021 (12) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... e company is expressly permitted to file its respective income tax, sales tax etc., and any other return to claim refunds. There are no reason to deprive the Petitioner Companies of the benefit of amalgamating the transferor and transferee companies which is intended for the beneficial growth of the Companies - petition disposed off. - CP(CAA) No. 98/233/AMR/2020 - - - Dated:- 11-11-2021 - Telaprolu Rajani, J. (Member (J)) For the Appellant : B. Jitendar, Advocate For the Respondents : Salvaji, Advocate ORDER Telaprolu Rajani, J. (Member (J)) 1. M/s. Silver Hill Town Farms And Developers Private Limited (herein after referred to as Transferor Company No. 1 and M/S Ramanand Developers Private Limited (herein after referred to as Transferor Company No. 2) and M/s. Raju Vegesna Infotech and Industries Private Limited (herein after referred to as Transferee Company) have moved this Petition under Section 233 for Amalgamation of the Transferor and Transferee Companies before the Regional Director by virtue of the procedural acceptance under section 233 of the Companies At, 2013. 2. The Regional Director, South East Region (SER), Ministry of Corporate Affa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme of amalgamation, the assessee is avoiding DDT (Dividend Distribution Tax) of ₹ 32 Crores @ 20%o on the Reserves and Surplus of ₹ 156 Crores of M/s. Ramanand Developers Pvt. Ltd. Thus causing loss of ₹ 32 Crores to the public exchequer. 3. Now it has to be seen whether the objections raised by the Income Tax Department are tenable and whether the Amalgamation would result in evading the payment of tax on the surplus of ₹ 156 Crores which are the proceeds of sale of property by the transferor company No. 2 which is worth ₹ 193 Crores approximately in Hyderabad. The report of the Regional Director would also reflect that ₹ 37 Crores of long term capital gains was paid to the Income Tax Department, which is stated to be 20% of the Sale price. The Petitioner Companies have submitted their reply to the objections raised by the Income Tax Department. With regard to the objections that was raised by the Regional Director that the Petitioner Companies may be directed to move the Petition under section 230 232 of the Act, the Counsel for the Petitioner Companies would submit that under Section 233 clause (12) the provisions of that section shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in participating in the capital on the liquidation of the transferor-companies. The assessee was a party to the said schemes of amalgamation and consented and agreed to the same where under, as noted earlier, no shares were to be issued to the assessee in lieu of or in exchange for the shares held by it in the transferor companies. The shares held by the assessee in the transferor-companies represented the capital invested by the assessee in the said companies and by the said amalgamations the assessee became the sole owner of the entire capital of the transferor-companies. By virtue of the said amalgamations the assessee as the transferee-company became the sole repository of all the rights which flowed from or were imbedded in the shares held by the assessee in the transferor-companies. (ii) The Supreme Court Judgement reported in (2015) 16 SCC 629, between the Department of Income Tax Versus Vodafone Essar Gujarat Limited and another has also made it clear that if any amount was required to be payable to the I.T. Department by the transferor company, the Income Tax Department could be said to Creditor so far as its claim was concerned and that the Income Tax Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d when it is accepted in the Annual General Meeting, the Company becomes liable to pay dividend to the Shareholders and pays the dividend distribution tax to the credit of Income Tax Department. He further submits that the Companies did not seek any exemption or benefit under Income Tax Act in the Scheme and hence the ITO should not have any objection to the Scheme. It is also submitted that both the Transferor companies are wholly owned subsidiaries of the Transferee Company and entire capital of the subsidiaries is held by the transferee company, and hence the question of transfer does not arise between the wholly owned subsidiary and the wholly owned holding company and when there is no transfer the objection of the Income Tax department is totally untenable. However, as already observed the judgement of the Supreme Court in the case Vodafone Essar Gujarat Limited and another cited above, makes it clear that even if the scheme of amalgamation is evolved to save income tax, it cannot be said that the only object of the scheme was tax avoidance. The scheme of amalgamation may consequently result in some tax benefit to the Petitioner Companies. Only on that ground, going by the spi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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