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of <h1>Supreme Court Remands Case for Fresh Decision on Merits</h1> <h3>Commissioner of Income Tax, Jaipur Versus M/s. Gopal Shri Scrips Pvt. Ltd.</h3> The Supreme Court allowed the appeal, set aside the High Court's order, and remanded the case back to the High Court for a fresh decision on merits in ... Proceeding in case of non-operational/ dissolved / struck off company - Appeal filed by Department before High Court was dismissed on the ground that it has rendered infructuous - non consideration of Section 506(5) proviso (a) of the Companies Act and Section 176 to 178 (discontinuance of business or dissolution)- HELD THAT:- Mere perusal of the impugned order quoted supra would go to show that the High Court dismissed the appeal on the ground that it has rendered infructuous because it was brought to its notice that the name of the company the assessee has been struck off from the Register of the Company u/s 560(5) of the Companies Act, 1956. High Court was of the view that since the respondent Company stands dissolved as a result of the order passed by the Registrar of the Companies under Section 560 (5) of the Companies Act, the appeal filed against such Company which stands dissolved does not survive for its consideration on merits. High Court was wrong in dismissing the appeal as having rendered infructuous. The High Court failed to notice Section 506(5) proviso (a) of the Companies Act and further failed to notice Chapter XV of the Income Tax Act which deals with 'liability in special cases' and its clause (L) which deals with 'discontinuance of business or dissolution'. The aforementioned two provisions, namely, one under the Companies Act and the other under the Income Tax Act specifically deal with the cases of the Companies, whose name has been struck off under Section 506 (5) of the Companies Act. These provisions provide as to how and in what manner the liability against such Company arising under the Companies Act and under the Income Tax Act is required to be dealt with. Since the High Court did not decide the appeal keeping in view the aforementioned two relevant provisions, the impugned order is not legally sustainable and has to be set aside. In view of the foregoing discussion, the appeal succeeds and is accordingly allowed. The impugned order is set aside. The case is remanded to the High Court for deciding the appeal afresh on merits in accordance with law keeping in view the relevant provisions of Companies Act and the Income tax Act uninfluenced by any observations made by us on merits. Issues:Appeal against dismissal of appeal as infructuous.Analysis:The appeal before the Supreme Court was filed against the High Court's judgment dismissing the appeal as having become infructuous. The High Court had dismissed the appeal after finding out that the respondent company had been dissolved as per the Companies Act, 1956. The primary issue in this case was whether the High Court was justified in dismissing the appeal on the ground of it being infructuous due to the dissolution of the respondent company.The Supreme Court, after hearing the arguments and perusing the record, found that the High Court erred in dismissing the appeal as infructuous. The High Court failed to consider the provisions of Section 506(5) proviso (a) of the Companies Act and Chapter XV of the Income Tax Act, which specifically deal with cases of companies whose names have been struck off under the Companies Act. These provisions outline how liabilities against such companies are to be handled under both Acts.The Supreme Court held that since the High Court did not consider these relevant provisions while dismissing the appeal, its decision was legally unsustainable. Therefore, the Supreme Court allowed the appeal, set aside the High Court's order, and remanded the case back to the High Court for a fresh decision on merits in accordance with the law. The Supreme Court refrained from making any observations on the merits of the case and requested the High Court to decide the appeal within six months due to its age.In conclusion, the Supreme Court found that the High Court's dismissal of the appeal as infructuous was incorrect due to the failure to consider relevant provisions of the Companies Act and the Income Tax Act. The case was remanded to the High Court for a fresh decision, emphasizing the importance of applying the relevant legal provisions in such matters.
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