Court-sanctioned amalgamation effective date depends on the scheme and compliance conditions, not an artificial transfer date.

In a court-sanctioned amalgamation, the effective date depended on the scheme and the court order, together with compliance with the stated implementation conditions. The scheme distinguished the transfer date from the operative date, and transfer and vesting arose only after sanction, filing of certified copies with the Registrars of Companies, and allotment of shares. Because no anterior effective date was fixed in the sanction orders, the stated transfer date of 1 January 1982 was treated as artificial and did not extinguish the transferor company for the relevant assessment years. The income-tax proceedings against the transferor company therefore remained valid.

---

---

Issues: Whether the amalgamation of the transferor company with the transferee company took effect from the stated transfer date so as to extinguish the transferor company for the relevant assessment years and invalidate the income-tax proceedings.

Analysis: The scheme made the transfer date and operative date distinct, and its implementation was expressly conditional upon sanction by the courts, filing of certified copies with the Registrars of Companies, and allotment of shares to the transferor company's shareholders. Under the scheme and section 394(2) of the Companies Act, 1956, transfer and vesting of assets took effect by force of the court's order, and the orders sanctioning amalgamation did not specify any anterior effective date. The stated transfer date of 1 January 1982 was found to be artificial and unrelated to the actual implementation of the scheme. The company also continued to appear on the Register of Companies long after that date. The precedents relied on by the petitioner did not assist because they involved orders expressly fixing an effective date, whereas no such date was fixed here.

Conclusion: The amalgamation did not take effect from 1 January 1982, and the transferor company remained assessable for the relevant years; the challenge to the assessment proceedings failed.

Final Conclusion: The writ petition was rejected on merits, leaving the income-tax proceedings against the transferor company intact.

Ratio Decidendi: In a court-sanctioned amalgamation, the effective date depends on the scheme read with the court's order and the conditions for implementation; an artificially stated transfer date cannot displace the legal effect of transfer and vesting that arises only upon compliance with the statutory and judicial requirements.

---