TaxTMI 
TaxTMI 
2020 (10) TMI 397
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....ective shareholders, etc. 2. Brief facts of the case, as mentioned in the company petition, are as follows : (1) M/s. Microsemi Storage Solutions India P. Ltd. (hereinafter referred to as the "transferor company No. 3/petitioner-company No. 1") was incorporated on August 31, 2005 under the provisions of the Companies Act, 1956, under the name and style of "PMC-Sierra India P. Ltd." with the CIN : U72200KA2005PTC037102. Subsequently, the name of the company was changed to "Microsemi Storage Solutions India P. Ltd." with effect from August 10, 2016 and having its registered office at No. 149B, EPIP Industrial Area, I Phase, Whitefield, Bangalore-560 066. Its authorised share capital is Rs. 10,00,00,000 divided into 20,00,000 equity shares of Rs. 10 each and Rs. 80,00,000 zero coupon redeemable preference shares of Rs. 10 each. Its issued, subscribed and paid-up share capital is Rs. 3,97,13,120 divided into 18,00,000 equity shares of Rs. 10 each, fully paid-up and 21,71,312 zero coupon redeemable preference shares of Rs. 10 each. The main objects of the company are to promote, encourage, establish, develop, maintain, organize, undertake, manage, operate, conduct, market an....
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....f Rs. 10 each fully paid-up. Its main objects, inter alia, are to design, develop, test, manufacture, assemble, trade, contract, sub-contract, license, improve maintain, service supply, buy, sell, market, distribute, import, transport, export, exchange, support, implement or otherwise deal in all types descriptions, etc. (4) The board of directors of the transferee company/petitioner-company No. 2 at their meeting held on August 19, 2019 have approved and adopted the scheme of amalgamation and, inter alia, resolved the following : "Resolved that pursuant to sections 230-232 of the Companies Act, 2013 ('Act') and other applicable provisions of the Act and Rules, subject to the approval of the National Company Law Tribunal, Bengaluru Bench and Hyderabad Bench, and subject to such terms and conditions and modification(s), as may be imposed, prescribed or suggested by the appropriate authorities and subject to the approval of the shareholders and creditors of the company, keeping in mind the larger interests of the company, the consent of the board be and is hereby accorded to the scheme of amalgamation, whereby Microsemi Communications India P. Ltd., and Micr....
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....ered office of the company was shifted to Hyderabad with effect from April 9, 2015 bearing (CIN) U51109TG2010FTC098393 and having its registered office at Nos. 12 and 13 Floors, Kapil Towers IT Park, Sy. No. 115/1, Nanakramguda, Serilin gampally Mandal, Hyderabad, Telangana-500 032. Its authorised capital is Rs. 5,00,000 divided into 50,000 equity shares of Rs. 10 each and the issued, subscribed and paid-up capital is Rs. 1,00,000 divided into 10,000 equity shares of Rs. 10 each fully paid-up. Its main objects, inter alia, are to design, develop, test, manufacture, assemble, trade, contract, sub-contract, license, improve maintain, service supply, buy, sell, etc. (8) It is stated that S. R. Batliboi and Associates LLP, chartered accountants, issued a certificate dated September 28, 2019 by, inter alia, certifying that the accounting treatment proposed in the scheme of amalgamation is in conformity with the Accounting Standard provided under section 133 of the Companies Act, 2013 and generally accepted accounting principles. (9) The benefits sought to be achieved by the scheme are as follows : (i) Greater focus on individual core businesses and optim....
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....nder sections 235 to 251 or any other provisions of the Companies Act, 1956 or sections 206 to 229 of the Companies Act, 2013 or any other provisions of the Companies Act, 2013. Further, there are no investigations pending against the petitioner-companies under any law. (13) It is stated that the petitioner companies are not required to issue notice of amalgamation to the Joint Director, Enforcement Directorate and the Directorate of Enforcement as there are no ongoing investigations against the petitioner-companies and further stated that the transferee company undertakes to pay all undisputed outstanding tax demands (if any) (including those undisputed tax demands that are outstanding on the transferor companies) once the matter reaches finality. 3. It is stated that the petitioner-companies had filed C. A. (CAA) No. 51/ BB/2019 before this Tribunal seeking to convene the meetings of the equity shareholders of the applicant-companies and the preference shareholders of applicant-company No. 1 for the purpose of considering the proposed scheme of amalgamation. The Tribunal vide its order dated September 20, 2019 allowed convening the meeting of the equity shareholders o....
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....e notice issued, the Registrar of Companies, Karnataka vide letter No. ROCB/Legal/C.P(CAA)No. 56/BB/2019, dated December 26, 2019 has, inter alia, observed as under : (1) Transferor companies Nos. 1, 2 and 4 are registered with Registrar of Companies, Hyderabad. (2) M/s. Microsemi Solutions Sdn. Bhd is the holding company of transferor company No. 3 which holds 99.99 per cent. of the share capital of the company and M/s. Microchip Technology Inc., USA is the holding company of the transferee company holding 73.69 per cent. of the share capital. Remaining shareholders are all foreign entities. (3) 100 per cent. shares of both transferor company No. 3 and the transferee company are held by foreign entities. Hence, both the companies have to comply with the FEMA/RBI Regulations. (4) As per statutory auditor's report for the year 2017-18 of transferor company No. 3, note 37 to the financial statements in respect of non-compliance with section 96 of the Act, as the financial statements for the year ended March 31, 2017 were not laid before the shareholders and the annual general meeting was not held within the time limits stipulated under section ....
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....statutory auditor has emphasized in his report dated September 27, 2018 that the company has received a notice from the Income-tax Department under section 143(5) of the Income-tax Act, 1961 arising on account of transfer pricing adjustment proposed to the taxable income for the financial year ended March 31, 2005 to March 31, 2013 and for sub sequent years. It is noticed that the company has not made any provisions in the financial statement for the said demand of Rs. 27.54 crores. (10) There are no prosecutions, complaints, technical scrutiny/inspections pending in this office against the petitioner-companies. The petition may be decided on merits. 8. The Regional Director (SER), Ministry of Corporate Affairs, Hyderabad, vide affidavit dated January 21, 2020, has reiterated the observations of the Registrar of Companies, Karnataka. 9. In response to the said observations by Registrar of Companies and Regional Director, the authorized signatory of the petitioner-companies have filed reply affidavits dated January 5, 2020 and February 14, 2020 by, inter alia, stating as follows : (1) With respect to the observations made by the Registrar of Companie....
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....nt. The transferee company under takes to spend the unspent CSR amount of transferor company No. 3 and undertakes to spend the same on activities as specified in section 135 of the Companies Act, 2013. (4) With respect to the further observations made by the Registrar of Companies with CSR computation, it is stated that transferor company No. 3 has computed the CSR amount as per section 135 of the Companies Act, 2013 read with section 198 of the Companies Act, 2013. The net profit amount is computed as per section 198 (i. e., net profit computed after making adjustments as mentioned in the section). Transferor company No. 3 confirms that the CSR amount is computed at 2 per cent. of net profit as per section 135 of the Companies Act read with section 198 of the Companies Act, 2013. The average net profit of 2015-16 to 2017-18 was Rs. 23,48,05,200 and 2 per cent. of the same translates to Rs. 46,96,104. The amount of Rs. 46,96,104 is computed as per section 135 of the Companies Act, 2013 and out of which Rs. 10,00,000 is spent and remaining amount of Rs. 36,96,104 is recognized as amount unspent in audited financial statement for financial year 2017-18. (5) With reg....
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....er from appropriate authorities. Considering the demand in the nature of contingent liability and the liability is not certain until the finality of the order from appropriate authorities, the transferee company has not recognized provision in the books of account. The transferee company undertakes to pay off the liability based on finality of the order from appropriate authorities. 10. The official liquidator vide O. L. R. No. 39 of 2020, dated May 29, 2020 in C. P. (CAA) No. 56/BB/2020 has, inter alia, stated that for scrutiny of the books of account and records of transferor company No. 3, has engaged M/s. Ramraj and Co., chartered accountants, which after examining the affairs of transferor company, has, inter alia, concluded in its report dated March 18, 2020 that the affairs of the company have not been conducted in a manner prejudicial to the interest of its members of the company or public interest. Therefore, the official liquidator prays that suitable order(s) may be passed on the merits of the case. 11. The Reserve Bank of India vide its letters bearing FE. BG. FID. No. Z13.05.971/2019-20, dated January 10, 2020 has, inter alia, stated that it is the duty of the co....
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....ttained legal finality. 14. Intimation of the scheme of amalgamation was sent to all relevant statutory authorities/regulators. Wherever no response has been received from the said authorities/regulators, it is deemed that they have no objection to the proposed scheme. 15. Heard Mr. Saji P. John, learned counsel for the petitioner, Smt. Prema Hatti, learned standing counsel for the Registrar of Companies and Mr. Ganesh R. Ghale for Income-tax through video conference. We have carefully perused the pleadings of the parties and the extant provisions of the Companies Act, 2013 and the Rules made thereunder and the law on the issue. 16. We have considered the facts of the case as mentioned in the petition, the reports of the Registrar of Companies and the Regional Director, MCA, in which the replies of the petitioner-companies to their observations have been duly examined, and the relevant provisions contained in the Companies Act, 2013 and other related Acts and Rules. In his report, the Regional Director, MCA has concluded that the scheme appears to be fair, reasonable and not detrimental against the members or creditors or contrary to public policy and the same can be appro....
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....scheme, are subject to the final decision of concerned Income-tax authorities and the decision of the concerned tax authorities, including the Appellate Authorities, shall be binding on the transferee company ; and (6) Any transaction, if any, that attracts the provisions of the FEMA or RBI Guidelines, shall be strictly adhered to and any liability arising there under shall be the liability of the transferee company ; and (7) All the proceedings now pending by or against transferor company No. 3 be continued by or against the transferee company, if any ; and (8) Any liability, arising from non-compliance with the provisions contained in section 135, shall stand transferred to and be the liability of the transferee company, if any ; and (9) Any compounding of offences/defaults committed under the Companies Act, 2013, and still pending, shall be taken up with the Registrar of Companies, Karnataka within a period of 30 days of this order ; and (10) The petitioner-company shall within (30) thirty days of the date of the receipt of this order cause a certified copy of this order along with a copy of scheme of amalgamation to be delivered to t....