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2019 (7) TMI 1523
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....ected to complete the assessment in respect of Assessment Years 2015-16 and 2016-17 within a period of twelve weeks from the date of receipt of the order on the basis of the revised returns that were submitted by the respective Respondent herein. 3. The specific question that arises for consideration in these Writ Appeals is whether the Appellant herein is bound to accept the revised returns filed by the respective Respondent herein in respect of the Assessment Years 2015-16 and 2016-17 without insisting upon the filing of an application to condone delay under Section 119 (2) (b) of the Income Tax Act,1961 (the Income Tax Act) read with Circular No. 9/2015 (the Circular) of the Central Board of Direct Taxes (the CBDT). In the Writ Petitions, it was contended by the respective Respondent herein that the Schemes of Arrangement between the respective Respondent and its shareholders, wherein the respective Respondent herein is the Transferee Company, provided expressly for the filing of revised returns beyond the specified time. Therefore, upon the sanction of the scheme by the National Company Law Tribunal(NCLT), it becomes obligatory for the Appellant to accept the revised returns....
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....filing of a revised return and that, therefore, if the said provision is inapplicable there is no scope for filing a revised return. 6. In response, the learned senior counsel who appeared for the respective Respondent herein referred to the impugned order of the learned judge. In particular, he referred to paragraphs 21, 24, 25, 26, 30 to 32 in order to contend that the Writ Court correctly analysed the implications of the sanction of the Scheme of Arrangement and held that the Appellant herein cannot raise objections to the filing of the revised return on account of not objecting to the specific clause in the Scheme of Arrangement whereby the respective Respondent herein became entitled to file revised returns even after the expiry of the due date. He further submitted that Section 119 (2) (b) of the Income Tax Act read with the Circular confers administrative powers on the authority concerned to condone delay in cases wherein the revised return contains omissions or errors. Consequently, he submitted that it is wholly inappropriate that an application to condone delay should be presented before an administrative authority when the NCLT sanctioned the Scheme of Arrangement in ....
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....satisfied. Accordingly, he submitted that the procedures prescribed in the Income Tax Act with regard to the filing of a revised return, including belated filing thereof, should be adhered to by the Respondent herein notwithstanding the sanction of the Scheme of Arrangement. 10. By way of concluding submissions, the learned senior counsel for the respective Respondent herein referred to paragraph 21 of the judgment of this court in Pentamedia Graphics ITO case, wherein it was held that once the scheme had been sanctioned with effect from a particular date, it is binding on everyone including the statutory authorities. Consequently, it was further held therein that the return filed on the basis of the state of affairs as of the appointed date cannot be ignored on the strength of Section 139 (5) of the Income Tax Act. By referring to paragraph 11 of the order of the NCLT, he submitted that it is incorrect to state that the scheme of arrangement is not binding on statutory authorities. 11. We considered the pleadings, documents, oral and written submissions of both sides carefully. The facts, in brief, are that Dalmia Power Limited (the Respondent in W.A. Nos. 566 and 567 of 201....
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....afatlal case), the Supreme Court held as follows with regard to the scope of the court-s jurisdiction under section 391 and 394 of the Companies Act, 1956: "29. However further question remains whether the court has jurisdiction like an appellate authority to minutely scrutinise the scheme and to arrive at an independent conclusion whether the scheme should be permitted to go through or not when the majority of the creditors or members or their respective classes have approved the scheme as required by section 391 subsection (2) On this aspect the nature of compromise or arrangement between the company and the creditors and members has to be kept in view. It is the commercial wisdom of the parties to the scheme who have taken an informed decision about the usefulness and propriety of the scheme by supporting it by the requisite majority vote that has to be kept in view by the court. The court certainly would not act as a court of appeal and sit in judgment over the informed view of the parties concerned to the compromise as the same would be in the realm of corporate and commercial wisdom of the parties concerned. The court has neither the expertise nor the jurisdiction to....
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....mbers or creditors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purported to represent. 8. That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant. 9. Once the aforesaid broad parameters about the requirements of the scheme for getting sanction of the court are found to have been met, the court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the court there would be a better scheme for the company and its members or creditors for whom the scheme is framed. The court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction. The aforesaid parameter....
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.... sanction of the Scheme of Arrangement. The next judgment to be considered is that of the Supreme Court in the JK Bombay case. In this case, the Supreme Court held that once a scheme is sanctioned by the court, it is binding on the company, the creditors and the shareholders and has statutory force. It was further held therein that such a scheme would be binding even on creditors and shareholders who dissented from or opposed the scheme. It should be noted that the Supreme Court did not hold that the scheme would be binding on statutory authorities in respect of statutory functions carried out by such authorities under other statutes or that it would override such statutory powers. 15. The judgment of this court in the Pentamedia Graphics ITO case remains to be considered. In paragraph 21 of the said judgment, this court held that the time limits specified in section 139 (5) of the IT Act would have to be considered in light of the appointed date under the scheme and the law laid down by the Supreme Court in the Marshall case. In addition, it was held therein that "the merits or otherwise on the returns filed, however, is a matter of assessment for the authorities to consider an....
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....ublic interest would suffer, I do not think any objection could be taken to such a view taken by an authority validly constituted. When an expert body assesses various aspects as regards the requirement on listing as required under law, it is well within its jurisdiction to pass an order rejecting the plea for listing, if it is satisfied on the materials therein, such listing is in violation of the securities laws. In considering the scope of the jurisdiction of the authorities functioning under the Securities Act of this court under section 391, one must keep in mind the clear-cut respective jurisdiction on matters before it. 43. It must be noted that SEBI acts on its own field, given the jurisdiction as a regulatory agency in the matter of dealing with stocks, shares and debentures. The intricacies on the listing of the companies is entirely with the stock exchange. Section 4 of the Securities Contracts (Regulation) Act empowers SEBI to recognise the stock exchanges. It also controls the rule-making of the said exchanges. Stock exchanges are held to be regulatory authorities. Their bye- laws bind not only buyers, sellers and brokers but also third parties who are affecte....
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....transferred undertaking) respectively under the Income Tax Act, credit of tax under section 115 JB read with 115JAA of the Income Tax Act, credit of foreign taxes paid/withheld, if any, pertaining to Amalgamating Company and Transferor Company (relating to the transferred undertaking) as may be required consequent to implementation of the scheme and where necessary to give effect to the scheme, even if the prescribed time limit for filing or revising such returns have lapsed without incurring any liability on account of interest, penalty or any other sum (emphasis added). Amalgamated Company and Transferee Company shall have the right to claim refunds, tax credits, set off's and/or adjustments relating to the income or transactions entered into by them by virtue of the scheme with effect from Appointed Date. The taxes or duties paid by, for, or on behalf of, Amalgamating Company and Transferor Company (pertaining to Transferred Undertaking) relating to the period on or after Appointed Date, shall be deemed to be the taxes or duties paid by Amalgamated Company and Transferee Company respectively and Amalgamated Company and Transferee Company shall be entitled to claim credit or ....
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....ances that may have to be made as per the mandate of law" (emphasis added). From the above paragraph of the order of the NLCT, it is abundantly clear that the respective respondent herein was required to obtain applicable permissions and fulfil all applicable compliances as per the mandate of law and that the order sanctioning the Scheme of Arrangement is not to be construed as an order granting exemption in respect thereof. Therefore, the NLCT also made it clear that the respective respondent herein would be required to approach the relevant statutory authorities, whenever required, in respect of applicable permissions and compliances. 20. The conclusions that can be drawn from the above analysis are as follows: a. The NCLT exercises supervisory jurisdiction and not appellate jurisdiction while considering the sanction of schemes of arrangement or compromise. b. In exercise of supervisory jurisdiction, the NCLT examines whether the scheme concerned has been approved by the requisite majority of shareholders and/or creditors, as the case may be, and whether the scheme is fair, reasonable and not opposed to public policy or law. In effect, it examine....