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TaxTMI 
TaxTMI 
TaxTMI 
2021 (12) TMI 192
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....nfotech and Industries Private Limited (herein after referred to as Transferee Company) have moved this Petition under Section 233 for Amalgamation of the Transferor and Transferee Companies before the Regional Director by virtue of the procedural acceptance under section 233 of the Companies At, 2013. 2. The Regional Director, South East Region (SER), Ministry of Corporate Affairs, Hyderabad (hereinafter referred to as R.D) filed the present Petition before this Tribunal on behalf of the Central Government, pursuant Section 233(5) of the Companies Act, 2013, Read with Rule 25(6) of Compromises, Arrangements and Amalgamation Rules 2016 since he received objections from the Income Tax Department. After receipt of the Petition by the Central....
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....ction 2(22) (e) of Income Tax Act, 1961 will become applicable under deemed dividend. As a result the company will have to pay taxes of about 40 crores at the rate of 25% on Rs. 156 Crores. d) The other option available in the hands of M/s. Ramanand Developers Pvt. is to transfer this surplus fund of Rs. 156 Crores by declaring Dividend and paying DDT. The DDT will be taxed at the rate of 20% on Rs. 156 Crores. The resultant tax effect will be approximately 32 Crores. e) By adopting this scheme of amalgamation, the assessee is avoiding DDT (Dividend Distribution Tax) of Rs. 32 Crores @ 20%o on the Reserves and Surplus of Rs. 156 Crores of M/s. Ramanand Developers Pvt. Ltd. Thus causing loss of Rs. 32 Crores to the public exchequer. 3. ....
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.... class of creditors or member or class of members to be called and conducted in such a manner as the Tribunal may direct is also met with since such meetings were already called for and there was an approval for the scheme of amalgamation by the Creditors. Hence, the objection with regard to provision of law under which this Petition should be moved does not seem to be tenable. 4. As regards the objection pertaining to the payment of tax on the proceeds of the sale of land, this Court does not find the said objection also tenable, as the Transferee Company which would be taking over the assets of the Transferor Companies would also be taking upon itself the liabilities. 5. The Counsel relies on the judgments of the Supreme Court (1984) 15....
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....essee in the said companies and by the said amalgamations the assessee became the sole owner of the entire capital of the transferor-companies. By virtue of the said amalgamations the assessee as the transferee-company became the sole repository of all the rights which flowed from or were imbedded in the shares held by the assessee in the transferor-companies." (ii) The Supreme Court Judgement reported in (2015) 16 SCC 629, between the Department of Income Tax Versus Vodafone Essar Gujarat Limited and another has also made it clear that if any amount was required to be payable to the I.T. Department by the transferor company, the Income Tax Department could be said to Creditor so far as its claim was concerned and that the Income Tax Depa....
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....ns of the Income Tax Department submits that had the reserves instead of being transferred to the Transferee Company, be declared as dividend and distributed among the shareholders, the companies should have paid dividend distribution tax @ 25% of the credit of the Income Tax and the same is avoided through the scheme under Subject. He submits that all the companies reserves are nothing but that portion of profits transferred to the reserve as permitted by law as per the payment of applicable taxes and the reserves were not credited without profit and without payment of taxes on the said profit. He also submits that the declaration of the dividend is the power and prerogative of the Board of Directors. He also submits that U/s 134(3)(k) of ....
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.... duties payable by the 1st and 2nd transferor companies from the appointed date onwards including all or as any refund and claim shall for all purposes be treated as the tax and/or duty liabilities or refunds and claims of the transferee and upon the scheme becoming effective, the transferee company is expressly permitted to file its respective income tax, sales tax etc., and any other return to claim refunds. 7. In the light of the above settled position of Law, I do not find any reason to deprive the Petitioner Companies of the benefit of amalgamating the transferor and transferee companies which is intended for the beneficial growth of the Companies. ORDER The CP (CAA) No. 98/233/AMR/2020 is disposed off with the following directions:....