TaxTMI 
TaxTMI 
2025 (12) TMI 917
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.... into four groups, as under, each headed by the sons of Late Lala K.C. Thapar. The family tree of Karam Chand Thapar family is explained as under in the form of a diagrammatic chart: 3. The aforesaid Memorandum of family settlement provided for the re- structuring of the companies as under: i. Scheme 1- Amalgmation of Nikhlesh Investments and Holdings (NIHL) with Karam Chand Thapar and Bros. Limited (KCTBL) ii. Scheme 2- It was comprised of two stages as under: Stage 1- Amalgamation of Modern Agencies Limited (MAL)&Gupkar Investments and Holdings Limited (GHIL) with KCTBL. Stage 2- Demerger of KCTBL into 7 companies namely KCT Coal Limited (KCL), KCT Chemicals and Electricals Limited (KEL), KCT Papers Limited (KPL), KCT Textiles Limited (KTL), RMS Merchantile Limited (RMS), PML Merchantile Limited (PML) and JMK Merchantile Limited (JMK). Thus, the assessee company, M/s KCT Papers Ltd. is one of the resulting companies. 4. The various schemes of amalgamations and demergers have been duly approved and sanctioned by the Hon. High Court of Delhi and Bombay in terms of section 391 and 394 of the Companies Act. The effective date of all the afore....
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....es, alongwith other assets and liabilities were transferred at their cost to the previous owner/ Book value. 8. Issue under consideration: The main contentious issue before us is the calculation of cost of acquisition of shares of Ballarpur Industries Ltd. The appellant has claimed that the cost of acquisition of the shares acquired under family settlement, should be taken as the cost to the previous owner as indexed with reference to the period of holding in the hands of previous owner and after taking into account the Fair Market Value of the shares as on 1.04.1981 in respect of the shares acquired on or before the said date. The assessee has accordingly adopted the indexed cost of acquisition of such shares. 9. On the other hand, assessing officer has taken cost of acquisition of shares as cost to the previous owner or book value of the shares, i.e., the value as appearing in the books of KCT Papers on appointed date of 1.4.2006. He has reckoned the period of holding from 1.4.2006 only, instead of referring to the date when the shares were first acquired by the previous owner. Thus, he has not allowed the benefit of indexation to the and also not considered fair market val....
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.... 44,925 1,575,298 - - 92-93 722,594 113,274,400 447,277 75,867,217 45,500 4,550,000 - - 93-94 201,150 25,143,750 45,762 10,940,535 (44,925) (3,042,770) - 2001-02 33,034 1,329,627 - - - - - - TOTAL 7,032,460 148,748,217 2,801,908 127,900,272 46,928 3,382,528 - - (i) A represents total number of shares of Billarur Industries Ltd. received by Assessee Company under the family settlement =. 98,81,296/- (ii) B represents total number of shares of Billarpur Industries Ltd on split up in the ratio of 5 share for one share held. = 5 x 98,81,296/- = 4,94,06,480/- (iii) C represents total number of shares of Billarpur Industries Ltd. bought back in the ratio of two for every five shares held = 4,94,06,480/- x 2/5 = 1,97,62,592/-. (iv) D represents the historical cost of shares of Billarpur Industries Ltd. received under family settlement = Rs. 28,00,31,017/- (v) On split up of shares of Billarpur Industries Ltd., the historical cost of shares remain same at Rs. 28,00,31,017/-. (vi) E represents the historical cost ....
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....milies. In case a family settlement is to be carried across the companies, then complete rearrangement and reallocation of the shareholding pattern has to be made. And no arrangement in the case of companies can be made except through the approval of High Court. Accordingly, in order to resolve the disputes in Thapar Group of Companies, the two schemes of Amalgamation, Arrangement and Reconstruction approved by the Delhi High Court vide its orders dated 27^th July, 2007 and 8th October, 2007 and by Bombay High Court Orders dated 27th April, 2007 and were carried out with a view to implement the Memorandum of family settlement or Thapar Family Settlement Agreement. The schemes of Amalgamation, Arrangement and Reconstruction were notwithstanding but part and parcel of the Memorandum of Family Settlement. This is evident from the sub- clause (ii) & (iii) of clause 2 of Annexure IV, on proposed steps for implementation of the Memorandum of Family Settlement contained on page no. 40 of the separate compiler submitted during the course of appellate proceedings and clause 2.3 of part D of Amalgamation, Arrangement and Reconstruction contained on page no.32 of the said compiler. It has bee....
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....rpose of computing capital gain. Now, in the present case when as a result of family settlement, no transfer of asset has actually taken place, then also the same indexed cost of acquisition after considering the fair market value as on 1.4.1981 in the hands of previous owner should be allowed to the appellant company. I am completely in agreement with the said argument of the AR. Accordingly, the computation of indexed cost of acquisition of shares at Rs. 72,79,22,871/- made by appellant is hereby upheld. 13. I do not find any merit in the contention of the Assessing Officer that Capital Gains was attracted at two points i.e. one at the time of amalgamation and other at the time of demerger. There was no transfer at the time of amalgamation or demerger. As held above the scheme of Amalgamation, Arrangement and Reconstruction was only part and parcel of family settlement. Further, it is a settled law that no transfer takes place in the case of family settlement. The contention of the Assessing officer that case laws relied upon by the assessee are distinguishable on facts is misplaced. In holding so, the A.O. has erred in getting biased by the fact that in the given case f....
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....e only issue involved in this case is the computation of indexed cost of acquisition in respect of shares of Ballarpur Industries P.Ltd. bought back by the company. These shares were acquired by the assessee company in a scheme of demerger w.e.f. 01.04.2006 at the book value of these shares in the books of demerging company. The AO has taken the cost of acquisition of these shares at book value of these shares in the books of demerging company and the benefit of indexation has been given from 01.04.2006 to the date of buy back of shares. On the other hand the assessee has claimed that the demerger has taken place to give effect to a family settlement of Thapar family and therefore, the indexation benefit is to be given with respect to the date of acquisition of these shares in the hands of previous owner(s). 2. In this background the AO rejected the claim of long term capital loss of Rs. 23,38,58,071/- of the assessee and computed long term capital gain at Rs. 38,20,52,393/-. However, the CIT(A), in para 12 & 13 of the appellate order accepted the assessee's contention by referring to several decision of various Courts with reference to family settlement and also refer....
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....efines amalgamation in Sec.2(1B) and demerger in Sec.2(19AA) any amalgamation or demerger which does not meet the requirements of these sections is not an amalgamation or demerger for the purpose of Section 47(vi) & 47(vib) of the I.T.Act, notwithstanding the corresponding provisions in the Companies Act and the orders of Hon'ble High Courts. Therefore, the transfer of shares of Ballarpur Industries Ltd. did take place from GIHL, MAL & KCTBL (old) to KCTBL (new amalgamated company) and these shares were again transferred to the assessee company on demerger and both these transfers have taken place on 01.04.2006. However, since these transactions were recorded at the cost value (book value) of these shares and there has been no provision in the I.T.Act to substitute the market value of shares transferred for the agreement value of transfer of shares similar to Sec.SOC, no capital gains arose in the hands of any person. Though it could have resulted in some loss due to indexation in the hands of GIHL, MAL & KCTBL (erstwhile amalgamating company), as far as assessee company is concerned it acquired the shares on 01.04.2006 at the book value of shares and being incorporated entity ....
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....even companies were determined on the basis of the same. Then the share holding of those seven companies was distributed amongst the family members of Thapar family in such a manner that the intrinsic value of shares of each family members is equal to his share in the market value of family wealth, as agreed during the family settlement. The surrender of shares of GIHL, MAL, KCTBL & NIHL and subsequent allotment of shares of seven demerged companies would be treated as transfer related to family settlement, though it is not clear whether the Thapar family constituted the Hindu Undivided Family for the purpose of Sec.47(i) & 49(1)(i) of the I.T. Act. 8. The shares in dispute in the present appeal is an asset of the assessee company which has its own independent existence from its share holders. These shares are distinct from the shares of demerged companies which are held by the Thapar family. The sale or transfer of any asset of assessee company is to be treated as the transfer of asset by itself, as a distinct entity for which the cost of acquisition would be the cost at which it acquired the asset. The Thapar family members never acquired that asset. They acquired shares....
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....out prejudice to the above, it was also submitted that since shares of BIL stood vested in the assessee pursuant to the family settlement agreement among the members of Thapar family, there was, even otherwise, no 'transfer 'and consequently, the assessee had rightly considered the cost of acquisition and period of holding of the previous owner. 22. The assessing officer, however, proceeded on the erroneous premise that the assessee had conceded that conditions of tax neutral amalgamation and demerger in terms of the provisions of the Act were not satisfied, and recomputed the capital gains on sale of shares of BIL by considering book value of shares on the date of demerger (i.e., as on 01.04.2006) as cost of acquisition of shares and reckoning the period of holding from the said date, thereby denying the benefit of indexation to the assessee from the date of acquisition of shares of the previous owner. 23. The stand of the assessing officer is, in fact, self-contradictory inasmuch as: (a) the assessing officer accepted another transaction of long-term capital gain of Rs. 3,36,25,904 declared by the assessee on transfer of rights/interest in M/s. ....
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....e aspect of whether the assessee had satisfied conditions stipulated in sections 2(1B) and 2(19AA) of the Act. 26 In this regard, it is respectfully submitted that the conditions of amalgamation and demerger as provided in section 2(1B) and section 2(19AA) of the Act stood satisfied in the case of the assessee and thereby provisions of section 47(vi) and 47(vib) of the Act was applicable in the case of the assessee. Re: Conditions of Amalgamation/ Demerger satisfied 27. Clauses (vi) and (vib) of the section 47 provides that transfer of a capital asset pursuant to a scheme of amalgamation and/ or demerger satisfying the definition in sections 2(1B) and 2(19AA) of the Act respectively, is exempt from capital gains. 28 The said section 47 of the Act reads as under: "47. Nothing contained in section 45 shall apply to the following transfers:- ................. ................ .................. (vi) any transfer, in a scheme of amalgamation, of a capital ass....
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.... 47(vi) or 47(vib) of the Act, in such cases, the cost of acquisition of such asset will be the cost in the hands of the previous owner. 34. Further, similarly, for the purpose of determining the period of holding of assets in the hands of the assessee (who acquired the asset in pursuance of section 47(vi) or 47(vib) of the Act), the period of holding of the asset by the "previous owner" is also to be taken into account, as mandated by clause (b) of Explanation 1 to section 2(42A) of the Act. Such complete period will be taken into account for the purpose of calculating the indexed cost of acquisition [Refer Arun Shungloo Trust v. CIT: 249 CTR 294 (Del.)]. 35 Therefore, applying the aforesaid provisions to the facts of the present case, it is submitted that the assessee company had rightly computed long-term capital loss on sale of shares of BIL by considering cost of previous owner as its cost of acquisition and including the period of holding of shares held by 'previous owner' in its period of holding. 36 Further, it is also important to note that in the assessment of KCTBL for the assessment year 2007-08 made by DCIT, Circle- 4, Kolkata, no add....
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....f capital gains were duly accepted by the assessing officer. It is respectfully submitted that once the assessing officer has himself accepted cost to previous owner pursuant to demerger as cost of acquisition of the assessee in case of sale of rights in M/s. Energetic Construction Pvt. Ltd., there was no reason for re-computing long term capital gains in case of sale of shares of BIL. The stand of the assessing officer is therefore, itself, self-contradictory and is liable to be reversed. Re: Indexed cost of acquisition 42. On perusal of second proviso to section 48 of the Act, it would be noticed that while computing capital gains in case of long term capital assets, reduction of 'indexed cost of acquisition' is allowable to the assessee instead of cost of acquisition. Indexed cost of acquisition is defined to be an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index (CII) for the year in which the asset is transferred bears to the CII for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later. 43. It is submitted that in the con....
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.... (Kolkata - Trib.) (m) Meher R. Surti vs. Income-tax Officer: 61 SOT 5 (Mum) (n) Smt. Pramila R. Wadhawan vs. ACIT: ITA Nos. 798 & 1901 of 2011(Mum) (o) Sujan Azad Parikh vs. DCIT: 145 taxmann.com 167 (Mum) (p) Vishwanath Sharma vs. ACIT: 58 SOT 267 (Chd.) 48. In view of the aforesaid settled legal position, it is submitted that the benefit of indexation would be available to the assessee, even if the property was first held by the assessee pursuant to the scheme of demerger." 17. The ld. AR of the assessee further submitted supplementary submissions reproduced as under :- During the course of hearing in the captioned matter on 28.04.2025, your Honour's had directed the assessee/ respondent to furnish certain information/ documents. In this regard, in continuation/ supplement to our earlier submission dated 28.03.2023, the requisite information/ details are submitted as under: I. Fair Market Value (FMV) of 98,81,296 shares of Ballarpur Industries Ltd. which vested in the assessee (resulting company) as part of demerger of Paper Undertaking/ Business w.e.f. 01.04.2006 (appointed date) 1. As elaborately ex....
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....effect to the family settlement agreement dated 27.04.2001, the assessee was entitled to benefit of period of holding as well as consequential benefit of indexation [refer detailed submissions, section 49(1)(e) read with section 2(42A) read with section 49(2) for amalgamation and section 49(1)(e) read with section 49(2C)) read with section 2(42A) in the context of demerger]. 7. As explained in our earlier submissions, two schemes of amalgamation and demerger under section 391 to 394 of the Companies Act, 1956 were filed before Hon'ble Delhi High Court and Bombay High Court which was duly approved and sanctioned as under: a) Scheme I- The first scheme was in respect of amalgamation of Nilkash Investments and Holdings Ltd. (hereinafter referred to as 'NIHL') with Karam Chand Thapar and Bros. Ltd. (hereinafter referred to as 'KCTBL') which was approved and sanctioned by Bombay High Court vide order dated 27.04.2007 and thereafter, by Delhi High Court vide order dated 27.07.2007. [Refer pages 222 to 237 of the paperbook] b) Scheme II- A composite scheme of amalgamation as well as demerger was approved and sanctioned by Delhi High Court vid....
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....holders (in value) of the demerged company. 11. In the present case, the aforesaid condition is duly satisfied inasmuch as the assessee (resulting company) had issued shares to all (and not just 75%) shareholders of the demerged company, as can easily be gauged from the following: * As explained earlier, as per Stage 2, the paper and related business of the merged KCTBL [i.e., after amalgamation of NIHL, MAL and GIHL] was demerged into the assessee (i.e., KCT Papers Limited), with 1.04.2006 as the appointed date; * In terms of the scheme of demerger, the assessee(resulting company) issued 1 share to every shareholder of KCTBL (merged entity) against every 5 equity share held in the merged company; the relevant clause of the scheme is reproduced hereunder for ready reference (@page 91 of paperbook): Section - 5 Capital Structure and Accounting Treatment .. ... .... Upon Demerger of the KCTBL (Merged) - Paper and Related Products Undertaking to KCT Paper Limited pursuant to the scheme, KCT Paper Limited shall in consideration of such demerger, issue and allot, without further application, to every member of KCTBL (Merged)....
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....s. 10 each par value credited as fully paid-up held by such members in KCTBL (Merged). Accordingly, KCT Paper Limited has issued and allotted at par 17,44,816 equity shares of Rs. 10 each to the shareholders of KCTBL (Merged) on January 22, 2008. The authorized capital of the company has been increased by Rs. 2,10,00,000 divided into 21,00,000 equity shares of Rs. 10 each on payment of requisite fees and stamp duty" ✓ Prior to the demerger, assessee had a paid-up share capital of Rs. 500,000, represented by 50,000 equity shares of Rs. 10 each; relevant extract of the annual return filed by the assessee under Schedule V, Part-II of the Companies Act, 1956 prior to effectuation of demerger is attached @ page 361 - 371 of paperbook -II. The following is the relevant extract of the same: ✓ Post implementation of the Court approved demerger, the assessee had issued 1 new equity share of Rs. 10 each to every shareholder of KCTBL for every five shares they held in KCTBL. This resulted in the issuance of 17,44,816 new equity shares by the assessee on January 22, 2008. Consequently, the total paid- up share capital of the assessee had increased significantly ....
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....the Act. 14. Most importantly, the scheme of amalgamation and demerger involving KCTBL were affected in the financial year 2006-07, relevant to assessment year 2007-08, which stood accepted in the assessment order dated 8.12.2009 of the said company [refer copy placed at pages 1-2 of case law paper book]. 15. Therefore, it was, in any case, not open to the assessing officer of the assessee, that too in the assessment year 2008-09, the year under consideration. III. Family Settlement - Not "transfer" for tax purposes 16. Further, as submitted earlier, shares of BIL vested in the assessee pursuant to the scheme of amalgamation and demerger undertaken to give effect to the Memorandum of Family Settlement dated 27.04.2001, which, inherently, does not amount to 'transfer' [refer detailed submissions vide paras 51 to 74 of Broad Propositions dated 28.03.2023] and consequently, not only cost of acquisition but also period of holding of the previous owner ought to be considered. 17. Kind attention is invited to certain pertinent clauses of Family Settlement dated 27.04.2001 (refer pages 18-61), comprehensively capturing the family settle....
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....ment, which demonstrates equitable and fair distribution amongst the groups involved; (k) Annexure IV (refer page 48-50 of paperbook) contains detailed steps for implementation of the family settlement; the same lays down all steps including consolidation of business and subsequent segregation (seven business) to be followed by inter-se transfer/ gift of shares of respective companies to allotted group. The aforesaid clearly demonstrates the comprehensive nature of settlement pursuant to multiple negotiations and mediations securing desired redistribution of business amongst the family groups. 18. As explained in our written propositions, it is settled law that a family arrangement merely realigns pre-existing rights and is not a "transfer" or "conveyance" in the traditional sense. The Courts have consistently held that such arrangements recognize and redistribute existing rights without triggering capital gains liability. 19. Key judicial precedents settling the said view are as under: * Ramcharan Das v. Girijanandini Devi: AIR 1966 SC 323 (SC) [Pg.43-53@52/ CLPBJ * Kale v. Deputy Director of Consolidation: 3 SCC 119 (SC) [Pg.5....
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....ion, otherwise than as a result of the acquisition of the property of one company by another company pursuant to the purchase of such property by the other company or as a result of the distribution of such property to the other company after the winding up of the first-mentioned company ;" (emphasis supplied) 4. For purposes of the Act, in order that merger of two or more companies satisfies the aforesaid definition of amalgamation contained in section 2(1B) of the Act, the following conditions, inter alia, need to be satisfied: (i) All the properties of the amalgamating company immediately before the amalgamation become the properties of the amalgamated company by virtue of the amalgamation; (ii) All the liabilities of the amalgamating company immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation; and (iii) Shareholders holding not less than three-fourths in value of the shares in the amalgamating company become shareholders of the amalgamated company by virtue of the amalgamation. 5. Similarly, term "demerger" is defined in section 2(19AA) of the Act, whic....
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....debentures) raised, incurred and utilised solely for the activities or operation of the undertaking; and (c) in cases other than those referred to in clause (a) or clause (b), so much of the amounts of general or multipurpose borrowings, if any, of the demerged company as stand in the same proportion which the value of assets transferred in a demerger bears to the total value of the assets of such demerged company immediately before the demerger. Explanation 3: For determining the value of the property referred to in sub- clause (iii), any change in the value of assets consequent to their revaluation shall be ignored. ................. ................." 6. Section 2(19AA) of the Act prescribes the following conditions to be fulfilled to qualify as tax neutral "demerger": * All properties of the demerged undertaking are transferred to the resulting company, ignoring the revalued amounts; * All liabilities relatable t....
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....e above, and in particular, the Transferor Companies' Business & Undertaking shall stand transferred to be vested in KCTBL in the manner described in sub paragraphs (b) to (s) below: (b) All the assets of the Transferor Companies as are movable in nature or incorporeal property or are otherwise capable of transfer by manual delivery or by endorsement and delivery, shall stand vested in KCTBL, with effect from the Appointed Date, and shall become the property and an integral part of KCTBL. The vesting pursuant to this sub-clause shall be deemed to have occurred by manual delivery or endorsement and delivery, as appropriate to the property being vested, and the title to such property shall be deemed to have transferred accordingly. (c) With effect from the Appointed Date, all movable property of the Transferor Companies other than those specified in sub-clause (b) above, including sundry debts, obtaining loans and advances, if any, recoverable in cash or in kind or for value to be received, bank balances and deposits, if any, with Government, semi-Government, local and other authorities and bodies, customers and other persons shall without any act, instrument or....
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....reunder: "(e) With effect from the Appointed Date, all debts, liabilities, contingent liabilities, duties and obligations, secured or unsecured whether provided for or not in the books of accounts or disclosed in the balance sheets of the Transferor Companies, shall become and be deemed to be the debts, liabilities, contingent liabilities, duties and obligations of KCTBL. f) With effect from the Appointed Date, the borrowing limits of the transferor companies approved by the respective shareholders of those companies under Section 293(1) (d) of the Act, shall be cumulatively added to the present borrowing limits of KCTBL and consequently, the borrowing limits of KCTBL shall stand increased to that extent. g) Without prejudice to the generally of the provisions contained herein, all loans raised after the Appointed Date but before the Effective Date operations shall be deemed to be the liabilities of KCTBL. l) With effect from the Appointed Date, KCTBL shall bear the burden and the benefits of any legal or other proceedings initiated or against the Transferor Companies." c) Shareholders holding not less than 3/4th in value of the shares i....
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....re the amalgamation become the properties of the amalgamated company by virtue of the amalgamation; It is submitted that pursuant to scheme of amalgamation approved and sanctioned by Hon'ble Bombay and Delhi High Courts, all the assets (both movable as well as immovable) of NIHL stood transferred to KCTBL. The same is clearly evident from the 'Scheme of arrangement and merger' approved and sanctioned by Hon'ble High Court, the relevant extracts of which are reproduced hereunder: "4.2 Subject to the provisions of the Scheme in relation to the modalities of transfer and vesting, on occurrence of the Effective Date, the whole of the business, personnel, property and assets of the Transferor Company shall stand transferred to and be vested in KCTBL, without any further act or deed, and by virtue of the Orders passed by the Hon'ble Delhi High Court, as also the Hon'ble Bombay High Court, as applicable, in the following manner: 'a) With effect from the Appointed Date; the entire business and undertaking of the Transferor Company shall stand transferred to and be vested in KCTBL without any further deed or act together with all its pr....
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....and the Scheme becoming effective in accordance with the terms thereof." b) All the liabilities of the amalgamating company immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation. It is submitted that pursuant to scheme of amalgamation approved and sanctioned by Hon'ble Bombay and Delhi High Courts, all the debts, liabilities, contingent liabilities, duties and obligations (both secured and unsecured) of NIHL stood transferred to KCTBL. The same is clearly evident from the 'Scheme of arrangement and merger' approved and sanctioned by Hon'ble High Court, the relevant extracts of which are reproduced hereunder: "(e) With effect from the Appointed Date, all debts, liabilities, contingent liabilities, duties and obligations, secured or unsecured whether provided for or not In the books of accounts or disclosed in the balance sheet of the Transfer of Company, shall become and be deemed to be the debts, liabilities, contingent liabilities, duties and obligations of KCTBL. (f) With effect from the Appointed Date, the borrowing limits of the Transferor Company approved by the sh....
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....te to be determined by the Board of Directors or a Committee of the Board of Directors of KCTBL ("Record Date") 8.2 The preference shareholder of the Transferor Company in consideration of such transfer shall, subject to the provisions of the scheme, (without further application, act or deed) be entitled to equity shares in KCTBL in the proportion of 1 equity share of Rs. 10/- each in KCTBL for every 16 preference shares of Rs. 10/- par value each held by them in NIHL on the Record Date." 11. In view of the aforesaid, it is submitted that in the amalgamation of NIHL with KCTBL pursuant to scheme of amalgamation approved and sanctioned by Hon'ble Bombay and Delhi High Court, all the conditions as stated above, were duly satisfied, and therefore, the said merger was tax neutral in accordance with the provisions of section 2(1B) of the Act. 12. Compliance of conditions stipulated in section 2(19AA) of the Act in the demerger of KCTBLT into 7 resulting companies (including KCT Papers i.e. the assessee) a) All properties of the demerged undertaking are transferred to the resulting company, ignoring the revalued amounts It is submitted tha....
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....espective Resulting Companies. The vesting pursuant to this sub-clause shall be deemed to have occurred by manual delivery or endorsement and deliver, as appropriate to the property being vested and title to the property shall be deemed to have been transferred accordingly. c) With effect from the Appointed Date, all movable property of KCTBL (Merged) relating to the respective Resulting Undertakings other than those specified in sub-clause (b) above, including sundry debts, outstanding loans and advances, if any, recoverable in cash or in kind or for value to be received, bank balances and deposits, if any, with Government, semi- Government, local and other authorities and bodies, customers and other persons shall without any act, instrument or deed become the property of the respective Resulting Companies. d) With effect from the Appointed Date, all immovable property (including land, buildings and any other immovable property of KCTBL (Merged), relating to the Resulting undertakings whether freehold or leasehold and any documents of title, right and easements in relation thereto shall stand transferred to and be vested in the respective Resulting Companies, wit....
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....t liabilities, duties and obligations of the respective Resulting Companies. f) With effect from the Appointing Date, the borrowing limits of KCTBL (Merged), pursuant to clause 2.2 (f) of Part-B of the scheme, shall be treated as the borrowing limits of the respective Resulting Companies and consequently, the borrowing limits of the respective Resulting Companies shall stand increased to that extent. g) Without prejudice to the generally of the provisions contained herein, with effect from the Appointed Date, all loans relating to the respective Resulting Undertakings, raised after the Appointed Date but before the effective date and the liabilities incurred by KCTBL (Merged) relating to the respective Resulting Undertakings after the Appointed Date but before the effective date for its operations shall be deemed to be those of the respective Resulting Companies. h) With effect from the Appointed Date, all contracts, deeds, bonds, agreements, schemes, arrangements and other instruments of whatsoever nature in relation to KCTBL (Merged) relating to the Resulting Undertakings to which KCTBL (Merged) is a party or to the benefit of which KCTBL (Merged) may b....
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....ited as fully paid-up in KCT Paper Limited for every 5 equity shares of Rs. 10/- each par value fully paid-up held by such member in KCTBL (Merged) pursuant to clause 4.1.1 of Part-B of this scheme, on a record date to be determined by the Board of Directors or a Committee of the Board of Directors of KCTBL (Merged)............................................... 5.12 Upon allotment, the said equity shares in the capital of the Resulting Companies, to be issued to the shareholders of KCTBL (Merged) shall rank pari passu in all respects, with the existing equity shares in the Resulting Companies from the effective date." e) Shareholders holding not less than 75% in value of shares of the demerged company become shareholders of the resulting company It is submitted that pursuant to amalgamation of KCTBL with MAL, GIHL and NIHL, the issued share capital of KCTBL (merged) was 87,24,079 equity shares of Rs. 10/- each. Further, as per the scheme of demerger, the assessee company allotted 1 equity share of Rs.10/- each for every 5 equity shares of KCTBL. Accordingly, 17,44,816 shares of the assessee company were allotted to the shareholders of KCTBL. The same is ....
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.... respective Resulting Companies, alienate, Charge encumber any of the properties of the respective Resulting Undertakings, except in .the ordinary course of business pursuant to any pre-existing obligation undertaken prior to the date of acceptance of the Scheme, as the case may be; d) KCTBL (Merged) shall not vary or alter, except in the ordinary course of business or pursuant to any pre-existing obligation" undertaken prior to the date of acceptance of the Scheme, the terms and conditions of employment of any of its employer nor shall it conclude any settlement with any union or the employees of any of the Resulting Companies, except with written concurrence of the respective Resulting Companies. e) All, debts, liabilities, duties and obligations which arise or accrue on or after the Appointed Date with respect to any of Resulting Undertaking, shall be deemed to be the debts, liabilities, duties and obligations "of the respective Resulting Companies whether or not provided in the books of account of KCTBL (Merged). 4.2 With effect from the Effective Date, the Resulting Companies shall commence and carry on and shall be authorized to carry on businesses ....
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....sation of Rs. 49,40,64,800/-. 22. The main issue under consideration is, whether the assessee is eligible to claim cost of acquisition of the previous owners and period of holding should be reckoned from the date of purchase by the previous owner, since these shares were purchased prior to 1.4.1981, can the assessee apply the fair market value as on 1.4.1981 and also adopt the relevant indexation benefits. We observed that the assessee had claimed the indexation cost of acquisition for the period 1.4.1981 to the date of sales by adopting the value as on 1.4.1981 and claimed the deduction of cost of acquisition Rs. 72.79,22,871/-. The same was rejected by the AO and determined the long term capital gains of Rs. 38,20,52393 instead of loss claimed by the assessee at Rs. 23,38,58,071/-. The issues raised before us were, the Ld CIT(A) allowed the appeal of the assessee on the basis of family arrangements and not adjudicated on the issue of whether the assessee is eligible to claim the benefit of previous ownership due to restructuring and provisions contained in the provisions of section 2(1B) and section 2(19AA) of the Act. 23. With regard to family settlement issue, we drawn th....
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.... 17,44,816 shares of the assessee company were allotted to the shareholders of KCTBL. The same is also evident from the Schedule-A 'Share Capital' of the financial statement of the assessee company drawn as on 01.04.2006. Further, necessary disclosure in this regard was also made in Schedule J - 'Significant accounting policies and notes to accounts' as under: "2(v) Pursuant to the aforesaid proposed Schemes of Arrangement Amalgamation, and Reconstruction "KCTBL (Merged)- Paper Related Products Undertaking" will demerge into KPL and the Shareholder of KCTBL (Merged) will receive 1 equity share of 10/- each fully paid up of KPL for every 5 equity shares of Rs. 10/- each in KCTBL (Merged) held by them, resulting in aggregate share capital of Rs. 17,948,160/- In view of the aforesaid facts, it is concluded that all the shareholders of the demerger company became the shareholders of the assessee company and therefore, this condition was also satisfied and also the transfers of the unit/division and activities were transferred on going concern basis. 26. He also brought to our notice list of shareholders of KCTBL as on 9.6.2008 (pages 379 to 387 of the PB-....