TaxTMI 
TaxTMI 
1990 (9) TMI 1
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.... 366 (Appx.)] answering the income-tax reference made to it by the Income-tax Appellate Tribunal. Briefly, the facts giving rise to this appeal are that the appellant, Saraswati Industrial Syndicate, is a limited company carrying on the business of manufacture and sale of sugar and machinery for sugar mills and other industries. Another company, namely, the Indian Sugar and General Engineering Corporation (hereinafter referred to as "the Indian Sugar Company") was also manufacturing machinery parts for sugar mills. On September 28, 1962, under the orders of the High Court, the Indian Sugar Company was amalgamated with the appellant-company. After the amalgamation, the Indian Sugar Company lost its identity, as it did not carry on any bus....
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....6 ITR) : "Whether, on the facts and circumstances of the case, the Tribunal was justified in law in holding that the amount of Rs. 58,735 was not chargeable to tax under sub-section (1) of section 41 of the Income-tax Act, 1961, for the assessment year 1965-66 ?" The High Court answered the question in favour of the Revenue holding that the exemption from tax liability claimed by the appellant-assessee was chargeable to tax under section 41(1) of the Act. The High Court held that, on the amalgamation of the two companies, neither of them ceased to exist; instead both the amalgamating and amalgamated companies continued their entities in a blended form. It further held that the amalgamated company was a successor-in-interest of the ama....
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....ession in respect of which the allowance or deduction has been made is in existence in that year or not." Section 41 (1) has been enacted for charging tax on profits made by an assessee, but it applies to the assessee to whom the trading liability may have been allowed in the previous year. If the assessee to whom the trading liability may have been allowed as a business expenditure in the previous year ceases to be in existence or if the assessee is changed on account of the death of the earlier assessee, the income received in the year subsequent to the previous year or the accounting year cannot be treated as income received by the assessee. In order to attract the provisions of section 41 (1) for enforcing the tax liability, the iden....
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....Sugar Company continued to have its identity and was alive for the purposes of section 41(1) of the Act. The amalgamation of the two companies was effected under the order of the High Court in proceedings under section 391 read with section 394 of the Companies Act. The Saraswati Industrial Syndicate, the transferee-company, was a subsidiary of the Indian Sugar Company, namely, the transferor-company. Under the scheme of amalgamation, the Indian Sugar Company stood dissolved on October 29, 1962, and it ceased to be in existence thereafter, though the scheme provided that the transferee-company, the Saraswati Industrial Syndicate Ltd., undertook to meet any liability of the Indian Sugar Company which that company incurred or it could incur, ....
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.... A. Khader [1986] 60 Comp Cas 1013, the effect of amalgamation of two companies was considered. General Radio and Appliances Co. Ltd. was the tenant of a premises under an agreement providing that the tenant shall not sub-let the premises or any portion thereof to any one without the consent of the landlord. General Radio and Appliances Co. Ltd. was amalgamated with National Ekco Radio and Engineering Co. Ltd. under a scheme of amalgamation and order of the High Court under sections 391 and 394 of Companies Act, 1956. Under the amalgamation scheme, the transferee-company, namely, National Ekco Radio and Engineering Company, had acquired all the interest, rights including leasehold and tenancy rights of the transferor-company, and the same v....
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....be the income of the amalgamated company for purposes of section 41(1) of the Act. The High Court was in error in holding that, even after amalgamation of the two companies, the transferor-company did not become non-existent but instead it continued its entity in a blended form with the appellant-company. The High Court's view that, on amalgamation, there is no complete destruction of the corporate personality of the transferor-company but instead there is a blending of the corporate personality of one with another corporate body and it continues as such with the other is not sustainable in law. The true effect and character of the amalgamation largely depends on the terms of the scheme of merger. But there cannot be any doubt that, when tw....