Dy. CIT v. Indus Fila Ltd. - Taxpublishers.in

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The Tax Publishers2013 TaxPub(DT) 1542 (Bang-Trib) : (2013) 052 (II) ITCL 0607 : (2013) 142 ITD 0296 : (2013) 094 DTR 0378 Income Tax Act, 1961 --Loss--Carry forward and set-off Losses of amalgamating company--Assessee-company and an another company engaged in similar line of business had decided to merge and thereupon on 11-3-2008, Board of Directors of assessee-company resolved that another company would merge with it subject to approval of shareholders of both the companies, High Court, stock exchanges and other regulatory authorities. Scheme of amalgamation of another company with the assessee was formulated and as per the said scheme with effect from appointed day i.e. 31-3-2008, another company ceased to be an entity and all the assets and liabilities of another company should vest with assessee. High Court by an order dated 6-2-2010 sanctioned the proposed scheme of amalgamation. Assessee had declared certain business income for relevant assessment year and claimed set-off of carried forward losses of amalgamating company against the income declared by it. Assessing officer disallowed the claim of assessee as the appointed day was arbitrarily fixed as 31-3-2008 and assessee adopted a colourable device seeking to set-off the amalgamation losses of another company against its profits. *Held :* Was not justified, as assessing officer expressing doubts regarding the scheme of amalgamation being a device to avoid taxes were all without any basis and were in the realm of suspicion and surmises. The Hon'ble Supreme Court in Marshall Sons & Co. (India) Ltd. v. ITO1997 TaxPub(DT) 901 (SC) : (1997) 223 ITR 809 (SC), the concluded that the amalgamation took effect from the appointed date as mentioned in the scheme of amalgamation which was duly sanctioned by the Hon'ble High Court without any change. Moreso the scheme also envisaged that between the appointed day till the date on which the scheme finally took effect i.e., the effective date, the business which was carried on by amalgamating company shall be deemed to have been carried on for and on behalf of assessee and in trust for assessee. Therefore, the amalgamation took effect from 31-3-2008. Income Tax Act, 1961, Section 72A In the ITAT, Bangalore B Bench N. Barathvaja Sankar, V.P. & N.V. Vasudevan, J.M. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1542 (Bang-Trib) : (2013) 052 (II) ITCL 0607 : (2013) 142 ITD 0296 : (2013) 094 DTR 0378

Income Tax Act, 1961

--Loss--Carry forward and set-off Losses of amalgamating company--Assessee-company and an another company engaged in similar line of business had decided to merge and thereupon on 11-3-2008, Board of Directors of assessee-company resolved that another company would merge with it subject to approval of shareholders of both the companies, High Court, stock exchanges and other regulatory authorities. Scheme of amalgamation of another company with the assessee was formulated and as per the said scheme with effect from appointed day i.e. 31-3-2008, another company ceased to be an entity and all the assets and liabilities of another company should vest with assessee. High Court by an order dated 6-2-2010 sanctioned the proposed scheme of amalgamation. Assessee had declared certain business income for relevant assessment year and claimed set-off of carried forward losses of amalgamating company against the income declared by it. Assessing officer disallowed the claim of assessee as the appointed day was arbitrarily fixed as 31-3-2008 and assessee adopted a colourable device seeking to set-off the amalgamation losses of another company against its profits. Held : Was not justified, as assessing officer expressing doubts regarding the scheme of amalgamation being a device to avoid taxes were all without any basis and were in the realm of suspicion and surmises. The Hon'ble Supreme Court in Marshall Sons & Co. (India) Ltd. v. ITO1997 TaxPub(DT) 901 (SC) : (1997) 223 ITR 809 (SC), the concluded that the amalgamation took effect from the appointed date as mentioned in the scheme of amalgamation which was duly sanctioned by the Hon'ble High Court without any change. Moreso the scheme also envisaged that between the appointed day till the date on which the scheme finally took effect i.e., the effective date, the business which was carried on by amalgamating company shall be deemed to have been carried on for and on behalf of assessee and in trust for assessee. Therefore, the amalgamation took effect from 31-3-2008.

Income Tax Act, 1961, Section 72A

In the ITAT, Bangalore B Bench

N. Barathvaja Sankar, V.P. & N.V. Vasudevan, J.M.