CIT V. BHARTI INFRATEL LTD

CO.APP./67/2012

AI Insights

The case involves multiple appeals by the Commissioner of Income Tax against various companies including Vodafone and Bharti, concerning the approval of merger and demerger schemes under Sections 391 to 394 of the Companies Act. The primary legal issue was the manner of recovery of tax dues from the transferor or transferee companies post-merger/demerger. The Supreme Court had previously dismissed similar challenges, affirming the Income Tax Department's right to recover tax dues from any liable entity. The High Court of Delhi, following the Supreme Court's precedent, dismissed the appeals, emphasizing adherence to the Supreme Court's principles regarding tax recovery in corporate restructuring.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 720254 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 14-09-2015
• Assessment Year: misc
• Laws Referred To: Companies Act, Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAJIV NAYAR; GOPAL JAIN
• Keywords: Demerger; Income Tax Department; Merger; Tax Recovery; Vodafone; Bharti
• Section: 391; 394; 392; 393

Judgement Text

"$-11 to 15 *IN THE HIGH COURT OF DELHI AT NEW DELHI + CO.APP. 63/2012 and CM Nos.12304-05/2012 CIT Appellant Through: None. versus VODAFONE ESSAR MOBILE SERVICE LTD Respondent Through : Mr. Rajiv Nayar, Sr. Adv. with Ms. Niti Dixit, Mr. Raunaq B. Mathur and Ms. Samiksha Godiyal, Advs. + CO.APP. 67/2012 and CM No.13359/2012 CIT Appellant Through: None. versus BHARTIINFRATEL LTD Respondent Through : Mr. Gopal Jain, Sr. Adv. with Mr. Vaibhav Choudhary, Mr. Chinmayee Chandra and Mr. Vidur Bhatia, Advs. + CO.APP. 55/2013 and CM No.12838/2013 COMMISSIONER OF INCOME TAX: DELHI - VI Appellant Through: None. Page 1 of5 3^^ Digitally Signed By:AMULYA Signature Not Verified versus VODAFONE INFRASTRUCTURE LIMITED & ORS. ... Respondents Through : Mr. Rajiv Nayar, Sr. Adv. with Mr. Milanka Choudhary, Ms. Sarojanand Jha and Mr. Yash Srivastava, Advs. for R-4. CO.APP. 56/2013 and CM No.12839/2013 COMMISSIONER OF INCOME TAX: DELHI -1 Appellant Through: None. versus BHARTIINFRATEL VENTUES LIMITED & ORS. ... Respondents Through : Mr. Gopal Jain, Sr. Adv. with Mr. Vaibhav Choudhary, Mr. Chinmayee Chandra and Mr. Vidur Bhatia, Advs. Mr. Rajiv Nayar, Sr. Adv. with Mr. Milanka Choudhary, Ms. Sarojanand Jha and Mr. Yash Srivastava, Advs. for R-4. CO.APP. 3/2015 and CM Nos.2238-39/2015 COMMISSIONER OF INCOME TAX-VI Appellant Through: None. versus Page 2 of5 3^ % VODAFONE DIGILINK LIMITED Respondent Through : Mr. Rajiv Nayar, Sr. Adv. with Mr. Anirudh Das and Mr. Manikrishnan, Advs. CORAM: HON'BLE MS. JUSTICE GITA MITTAL HON'BLE MR. JUSTICE I.S.MEHTA ORDER 14.09.2015 1. There is no appearance on behalf of the appellant despite the matter having been passed over once. There was no appearance on behalfofthe appellant on the last two dates as well. 2. Separate claims for mergers and demergers were moved before the learned company judge by two sets of companies i.e. Vodafone and Bharti respectively under Sections 391 to 394 of the Companies Act which were approved by the learned company judge by the order dated 29^^^ March, 2011. This order was being assailed by the department of Income Tax before the Supreme Court ofIndia by way of SLP(C)No.29819/2012. 3. Learned Senior Counsel for the respondent has informed us that the scheme was approved by the Division Bench ofthe Gujarat High Court by its judgment dated 27^^ August, 2012 on the petition moved by the Gujarat Company. This order of the Division Bench was assailed by the appellantby way of SpecialLeave Petition Page 3 of5 4. It appears that the appellant was pressing its challenge on the issue of the manner in which proceedings for recovery of any tax dues would be effected from the transferor or transferee companies upon the merger/demerger. The learned company judge rejected these objections in the petitions filed by the parties resulting in the filing ofthese appeals. 5. The appellant's challenge to similar orders with regard to Vodafone Essar Mobile Services Ltd. was rejected by the Supreme Court in the following terms : \"Heard learned counsel for the parties. We are not inclined to entertain the special leave petitions. The special leave petitions are, accordingly, dismissed. We only state that the Income Tax Department is entitled to take out appropriate proceedings for recovery of any tax statutorily due from the transferor or transferee company or any other person who is liable for payment of such tax due.\" 6. We are informed by Mr. Rajiv Nayar, learned Senior Counsel appearing for the Vodafone, Bharti and Indus Towers companies that this very issueis the primary groundofchallenge in all these appeals and that the same would stand governed by the principle laid down by the Supreme Court in the aforesaid order of 15\"^ April, 2015. 7. It would appear that as a result of the outcome of the challenge before the Supreme Court, the appellant is also not interestedin prosecutionofthe present appeals. Page 4 of5 These appeals and applications are therefore, dismissed. It needs no elaboration that the parties have to abide by the principle laid down by the Supreme Court in its order dated 15* April, 2015 so far as the statutory tax dues claimed by the Income Tax authorities against the parties are concerned. This principle would bind the parties in all these appeals. SEPTEMBER 14,2015 aj E^TMEHTA, j Page 5 of5 "