M/S DALMIA POWER LIMITED & ANR. V THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1, TRICHY, Civil Appeal Nos.949699 Of 2019, (Arising out of SLP (C) Nos.19678681 of 2019)
This appeal was brought to the Supreme Court of India before the bench consisting of Uday Umesh Lalit and Honourable Justice Indu Malhotra.
The issue which arose for consideration in the present Civil Appeals was
Whether the Department ought to have permitted the assessee companies to file the revised Income Tax Returns for the Assessment Year 2016-2017 after the expiry of the due date prescribed under Section 139(5) of the Income Tax Act, 1961 on account of the pendency of proceedings for amalgamation of the assessee companies with other companies in the group under Sections 230-232 of the Companies Act, 2013.
Subsection (1) of Section 170 makes it clear that it is incumbent upon the Department to assess the total income of the successor in respect of the previous assessment year after the date of succession. In the present case, the predecessor companies/transferor companies have been succeeded by the Appellants/transferee companies who have taken over their business along with all assets, liabilities, profits and losses etc. In view of the provisions of Section 170(1) of the Income Tax Act, the Department is required to assess the income of the Appellants after taking into account the revised Returns filed after amalgamation of the companies.
BRIEF FACTS OF THE CASE
In the present case, Appellant Nos.1 and 2/Transferee Companies filed their original Returns of Income on 30.09.2016 and 30.11.2016 respectively. Thereafter, they entered into Schemes of Arrangement and Amalgamation with 9 Transferor Companies in 2017. The Schemes were finally sanctioned and approved by the NCLT, Chennai vide final orders dated 20.04.2018 and 01.05.2018. The Appointed Date as per the Schemes was 01.01.2015. Consequently, the Transferor/ Amalgamating Companies ceased to exist with effect from the Appointed Date, and the assets, profits, and losses, etc. were transferred to the books of the Appellants/ Transferee Companies/Amalgamated
Companies. The Schemes incorporated provisions for filing the revised Returns beyond the prescribed time limit since the Schemes would come into force retrospectively from the Appointed Date i.e. 01.01.2015.
APPELLANTS CONTENTION
The Appellants filed their Revised Returns on 27.11.2018. The recomputation would have a bearing on the total income of the Appellants with respect to the A.Y. 20162018, particularly on matters in relation to carrying forward losses, unabsorbed depreciation, etc. The Department informed the Appellants on 05.08.2019 that since the revised Returns were not in accordance with Sections 139(5), 139(3) of the Act read with Rule 12(3) of the Income Tax Rules, 1962, the revised Returns were invalid, and could not be considered in view of the procedural requirement under Section 119(2)(b) read with CBDT Circular No. 9 of 2015. Aggrieved by the Judgment of the Division Bench, the Appellants filed the present common Civil Appeals on 09.08.2019 before this Court. The Appellants made a representation on 22.07.2019 stating that subsequent to the approval and sanction of the Scheme of Arrangement and Amalgamation, the
income of the Transferor companies merged in the hands of the Appellants w.e.f. 01.01.2015, being the Appointed Date as the “date of succession” under S.170 of the Act. Accordingly, the Appellants requested the Department to give cognizance to the Scheme, and accept the revised Return of Income filed on 27.11.2018, while completing the assessment for the A.Y. 20162017.
RESPONDENTS CONTENTION
The counsel appearing for the Department relied on Section 139(5) and 119(2)(b) of the Income Tax Act read with Circular No.9 of 2015 issued by the CBDT to contend that the Appellant ought to have made an application for condonation of delay, and sought permission from the CBDT, before filing the revised Returns beyond the statutory period of 31.03.2018. The Appellants having belatedly filed their revised Returns on 27.11.2018, which was beyond the due date of 31.03.2018 for A.Y. 20162017, the assessment could only be done on the basis of the original Returns filed by the Appellants.
OBSERVATION MADE AND JUDGMENT DELIVERED
Thereby, this Honourable Court, after inferring the facts and circumstances of the case, gave its judgment as under,
“In light of the aforesaid discussion, we find that the learned Single Judge had rightly allowed the Writ Petitions. We accordingly set aside the impugned Judgment and Order dated 04.07.0219 passed by the learned Division Bench, and
restore the judgment dated 30.04.2019 passed by the learned Single Judge. Accordingly, the Civil Appeals are allowed. The Department is directed to receive the revised Returns of Income for A.Y. 20162017 filed by the Appellants, and complete the assessment for A.Y. 20162017 after taking into account the Schemes of Arrangement and Amalgamation as sanctioned by the NCLT. Pending Applications, if any, are accordingly disposed of Ordered accordingly.”
View/Download Judgment: M s Dalmia Power Limited & Anr. v. The ACIT
– Tanvi Srivatsan
