TaxTMI 
TaxTMI 
2013 (2) TMI 149
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.... Total Rs.53,90,62,500/- 3. A scheme for amalgamation was formulated by eight different companies, including Torrent Power Ltd., Torrent Leasing and Finance Ltd. and Torrent Ltd. The said scheme envisaged 1st August 1999 as the effective date from which such amalgamation would take effect. Such scheme was presented before the Gujarat High Court for its sanction. The Gujarat High Court by its order dated 20th June 2000, sanctioned such scheme. According to such scheme, as sanctioned by the Gujarat High Court, eight different companies amalgamated into Torrent Investment Ltd with effect from 1st August 1999. It is stated that the Torrent Investment Ltd is now renamed as Torrent Private Ltd, i.e. the petitioner Company. 4. Torrent Power Ltd. had after the effective date of amalgamation, but before the same was actually sanctioned by the Gujarat High Court, declared and paid out total dividend of Rs.53,90,62,500/- to three shareholder companies in the above noted proportion. The said Company had also deposited with the department the dividend distribution tax of Rs.5,92,96,875/-. On the ground that upon amendment of different companies into Torrent Investments Ltd. with effe....
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.... moved an application before the Assessing Officer on 30th July 2001 and claimed refund of the dividend distribution tax already paid by the Company. In such application, the petitioner drew the attention of the Assessing Officer to the above noted note put in the return filed and contended that by virtue of the amalgamation of different companies, the petitioner no longer had the liability to pay the distribution dividend tax under section 115-O of the Act and that, therefore, the amount of Rs.5,92,96,875/- is refundable to the petitioner. 6. The Assessing Officer, however, by his detailed speaking order dated 24.5.2002, rejected such an application. He was of the opinion that the liability to pay tax would arise as soon as the dividend is credited or distributed or deemed to have been paid, credited or distributed to the shareholders. In this context, he referred to the decision of the Apex court in the case of Kishinchand Challaram v. Commr. Of Income Tax, 46 ITR 640. He further recorded that the petitioner had not claimed refund in the return of income filed, but only by a note attached to the return. He was of the opinion that the petitioner failed to point out any provisio....
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....ounsel also relied on a decision of the Bombay High Court in the case of Mafatlal Gagalbhai and Co. Pvt. Ltd. v. C.I.T., 193 ITR 188 wherein under similar circumstances, it was observed that if by operation of law, the declaration of dividend becomes illegal, inoperative or invalid during the previous year itself, it is possible to conceive of a situation in which an assessee would be entitled to say that no income by way of dividend accrued to him during the previous year. Counsel also relied yet another decision of the Bombay High Court in the case of New Shorrock Spg. & Mfg. Co. Ltd. v. CIT, 208 ITR 765 in which it was observed that amalgamation was effected in the same previous year in which the dividend was declared. The company receiving dividend had ceased to exist by virtue of the orders of amalgamation passed by the two High Courts. Such company was amalgamated in the company paying the dividend. Such income, therefore, could not be taxed as income in the hands of the assessee company. 10. On the other hand, learned counsel Ms.Sheth for the Department opposed the petition contending that under section 115-O of the Act, liability to pay dividend distribution tax arose th....
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....sing Officer. Essentially, the Assessing Officer on 24th May 2002, passed an order rejecting the petitioner's claim for refund. Such order was certainly amenable to revision at the hands of the Commissioner under section 264 of the Act. Section 263, as is well known, empowers the Commissioner to call for and examine the record of any proceedings under the Act and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may pass such orders as the circumstances of the case justify. Likewise, section 264 of the Act pertains to revision of other orders. Sub-section (1) thereof provides that in the case of any order other than an order to which section 263 applies passed by an authority subordinate to the Commissioner, he may on his own motion or on an application by the assessee for revision call for the record of any proceeding under the Act in which any such order has been passed and may pass such order as he thinks fit. In the present case, order dated 24.5.2002 passed by the Assessing Officer was certainly one to which the Commissioner's revisional powers under section 264(1) apply. 13. ....
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.... Transferor Company and the Transferee Company may carry on business, as has happened in this case but normally provision is made for this aspect also in the scheme of amalgamation. In the scheme before us, clause 6(b) does expressly provide that with effect from the transfer date, the Transferor Company (Subsidiary Company) shall be deemed to have carried on the business for and on behalf of the Transferee Company (Holding Company) with all attendant consequences." In the case of Saraswati Industrial Syndicate Ltd v. CIT, Haryana, AIR 1991 SC 70, the Apex Court on the question of amalgamation of two companies observed as under : "Two companies may join to form a new company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity." The effect of this legal proposition would be that by virtue of deeming fiction of amalgamation relating back to the date envisaged in the scheme, transaction of payment of dividend by the transferor company to other three co....
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....dividend is declared." Likewise, in the case of New Shorrock Spg. & Mfg. Co. Ltd. (supra), facts were that the assessee company had on 25.5.72 declared its dividend for the year 1971. One Mafatlal Gagalbhai and Co. Pvt. Ltd. holding shares in the assessee company received dividend in respect of its holdings in the assessee company. On 27th October 1972, a proposal was initiated for amalgamation of Mafatlal Gagalbhai and Co. Pvt. Ltd. with the assessee company. Petitions for such purpose were filed before the Bombay High Court and the Gujarat High Court. By the orders passed on 24th September 1973 and 26th September 1973, the said High Courts sanctioned the amalgamation scheme. Under both these orders, amalgamation came into effect from 1st April 1972. In the assessment year 1973-74, the assessee company was sought to be taxed in respect of the dividend income received by Mafatlal Gagalbhai and Co. Ltd. The contention of the assessee was that Mafatlal Gagalbhai and Co. Ltd. having ceased to exist with effect from 1st April 1972, by virtue of the orders of amalgamation, the assessee company could not be taxed for the dividend distributed in favour of Mafatlal Gagalbhai & Company. ....
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....om the transferor to the transferee companies must be treated as branch transfer. This was also the view expressed by the Bombay High Court in the case of National Organic Chemicals Industries Ltd. (supra). In the said case, this precisely was the issue presented before the High Court. A Division Bench of the High Court ruled that the Company loses its corporate personality from the date declared by the competent authority under the Companies Act. In case of amalgamation of a company, the High Court being the competent authority, when the High Court sanctions the scheme for amalgamation and declares the effective date from which such amalgamation would operate, from such date, the corporate personality of the company gets destroyed. On such principle, the Bombay High Court ruled that no sales tax was payable on the transfer by the transferor company to the transferee company during the period when the scheme for amalgamation was framed till the same was sanctioned by the High Court. We may notice that the statutory provisions arising for consideration in the Bombay High Court contained in the Maharashtra Sales Tax Act in all material purposes are similar to the provisions arising i....