MARSHALL SONS AND CO. (INDIA) LTD. vs. INCOME TAX OFFICER

CIVIL APPEAL No. 1661/1992Supreme Court1996 INSC 139127 November 1996Bench: 2 JudgesAuthor: B.P. JEEVAN REDDY, S.C. SEN B MARSHALL SONS AND CO.17 pages
AI SummaryAllowed

What did the Supreme Court hold?

The Supreme Court held that the notices issued by the Income Tax Officer were not warranted in law. The Court reasoned that when a scheme of amalgamation is presented to the Company Court and sanctioned without specifying an alternative date, the date of amalgamation is the date stipulated in the scheme itself. In this case, the scheme clearly provided January 1, 1982, as the transfer date. The Court emphasized that the business carried on by the Transferor Company (Subsidiary Company) should be deemed to have been carried on for and on behalf of the Transferee Company (Holding Company) from the specified transfer date. The subsequent events like the court's order, filing of certified copies, and allotment of shares do not alter the effective date of amalgamation as stated in the scheme. The ratio is that a court-sanctioned amalgamation takes effect from the date specified in the scheme if the court does not prescribe a different date. The appeals were allowed, and the writ petitions were deemed to have been allowed. The Court made no comment on the revenue's plea that amalgamation was a tax evasion device.

What were the facts?

Marshall Sons and Co. (India) Ltd. (Holding Company) appeals against the Madras High Court's dismissal of its writ petition. The Subsidiary Company, with an accounting year ending December 31, intended to change its year to June 30, 1983, for eighteen months. Both companies resolved to amalgamate, with the scheme specifying January 1, 1982, as the transfer date. The Company Courts sanctioned the scheme on November 21, 1983 (Madras) and January 11, 1984 (Calcutta) without specifying an alternative date. The Subsidiary Company's name was struck off the register on January 21, 1986. Notices under Section 139(2) were issued to the Subsidiary Company for assessment years 1984-85 and 1985-86. The company argued that amalgamation effective January 1, 1982, rendered these notices invalid. The High Court held that in the absence of a specified date by the Company Court, the date of the court's order should be taken as the amalgamation date.

What were the issues?

1. Whether, in the absence of a specific date prescribed by the Company Court for amalgamation, the date of amalgamation is the date specified in the scheme of amalgamation, or the date of the Company Court's order sanctioning the scheme? (Question of law, turning on the interpretation of company law and its interplay with tax law). Assessee's contention: The appellant contended that unless the Company Court specifies otherwise, the date provided in the Scheme of amalgamation is taken as the actual date of amalgamation. After this date, the business carried on by the Subsidiary Company was as an agent for and on behalf of the Holding Company. They relied on Raghubar Dayal v. The Bank of Upper India Ltd. Revenue's contention: The respondent contended that the Subsidiary Company can be said to have ceased to exist only when its name was struck off from the Registrar of Companies.

Which sections of the Income-tax Act were involved?

Section 139(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Cited by 29 judgments on BharatTax

See all citing judgments →

Counted from the text of the judgments hosted here. Most recent first.

A B MARSHALL SONS AND CO. (INDIA) LTD. v. INCOME TAX OFFICER NOVEMBER 27, 1996 [B.P. JEEVAN REDDY AND S.C. SEN, JJ.] Income Tax Act, 1961 : Sections 139(2), 142( 1)-f'eriod for filing retum-Detennination of-Amalgamation of Company w.e.f 1.1.82 as per the Scheme-Scheme sanctioned by Company Court without specifying any other C date for amalgamation-Name of the Company strnck off from the register of Registrar of Companies on 21.1.1986-Notice to file retum for the period from 1.1.82 to 21.1.86-Held, in the circumstances of the case the date of amalgamation is 1.1.82, hence the notices issued by Income Tax Officer not wa"anted in law. D The accounting year of a company situated in Madras (hereinafter called Snbsidiary Company) was ending on December 31. The appellant company sitnated · in Calcutta, successor to the Subsidiary Company (hereinafter called Holding Company) had its acconnting year ending on June 30. The Subsidiary Company with intention to change its accounting E year sent letter to income tax authorities stating therein that it would wish to change its acconnting year and would wish to close its account on June 30, 1983 for eighteen months. The cha

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 142(1)

All 17,244 judgments and leading authorities on Section 142(1) →

Recent GST High Court judgments

Search GST case law →