Citation – 2019 SCC OnLine SC 1640

Facts of the Case

Dalmia Power Ltd. (Appellant No. 1) is engaged in the business of building, exercising, and all the work related to the power sector and Dalmia Cement (Bharat) Ltd. Appellant No. 2 is engaged in the manufacturing of cement related business. Appellant No. 2 entered into an arrangement and scheme of amalgamation which was duly approved by NCLT and another scheme of amalgamation entered into by Appellant No. 1 has been duly approved by the NCLT, Chennai. They both are public limited companies, duly incorporated under Companies Act, 1956. Both have filed their Return of Income Tax under Section 139 (1) of the Income Tax Act, 1961. In the year 2018, after the amalgamation, they filed for revised income tax returns and both claimed losses of certain amounts in the current year being carried forwarded to the next year. The department issued the notice on 4/12/2018 under Section 143 (2) of the Income Tax Act, 1961 for approval of the above-mentioned scheme but after knowing that Appellants had become very late to file the revised returns and without obtaining the permission of Central Board of Direct Taxes for their delay under Section 119 (2) (b) of the said act, withdrew their approval for the same. Also, under Section 143 (2), the assessment proceeding became rejected against Appellant No. 2. So, the appellants have filed a writ petition for quashing the above order and thereby allowing the assessment and scheme of amalgamations for them. 

Issue Raised

1. Whether the method of amalgamation decided by the National Company Law Tribunal under Section 391 of the Companies Act (which allowed petitioners to file revised Income Tax returns after the prescribed period is expired) is binding on the authorities if the period has expired as given under Section 139 (5) of the Income Tax Act, 1961? 

2. Whether the circular issued under Section 119 (2) of the Income Tax Act overrides the amalgamation method adopted by NCLT?

3. Whether Rule 12 (3) of the Income Tax Rules, which talks about the filing of Income Tax Returns electronically mandatory, and are there any exceptions to it?

Judgment 

1. The scheme of arrangement and amalgamations approved by NCLT (Section 391 of Companies Act) gives statutory guidelines for the petitioner to file their revised return beyond the prescribed period but Section 139 (5) of the Income Tax Act, 1961, is not applicable where the approval is not given.

2. The Circular under Section 119 (2) (b) is also not applicable when the approval of the schemes of the arrangement and amalgamations have been approved.

3. Rule 12 (3) of the Income Tax Rules is not applicable in the cases where there have been filing of revised income returns by the assessee when the scheme of amalgamations have been approved by the NCLT.

So, the writ petition is allowed.

Analysis

It has been observed that if a public company registered under the Companies Act, is allowed for any scheme of arrangement or amalgamations by the National Company Law Tribunal, the revised Income tax return can be filed even after the due date prescribed have been passed.

(By – Sherry Shukla)