I Gate Global Solutions Ltd., Bangalore V. DCIT, Bangalore

ITA 46/BANG/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5212 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 19-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Scheme of amalgamation; Revised return; Unabsorbed depreciation; Capital Gains
• Section: 139(5); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 46/BANG/2010 ASSESSMENT YEAR : 2004-05 IGATE GLOBAL SOLUTIONS LTD., FOR & ON BEHALF OF MERGED COMPANY QUITANT SERVICES LTD., 158-162(P) & 165(P)-170(P) EPIP PHASE II, WHITEFIELD, BANGALORE 560 066. : APPELLANT VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 11(2), BANGALORE. : RESPONDENT APPELLANT BY : SHRI PADAMCHAND KHINCHA, C.A. RESPONDENT BY : SMT. SWATI S. PATIL, CIT(DR) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE COMPANY IS DIRECTED AG AINST THE ORDER OF THE LD. CIT (A)-I, BANGALORE, IN ITA NO: 96/DC 1 1(4)/A-I/07-08 DATED: 5.10.2009 FOR THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE COMPANY (THE ASSESSEE IN SHORT) H AS FOR AND ON BEHALF OF THE MERGED COMPANY QUITANT SERVICES LIMI TED RAISED EIGHT GROUNDS IN AN ILLUSTRATIVE AND ELABORATE MANNER. O N A CLOSE SCRUTINY, ITA NO.46/BANG/10 PAGE 2 OF 13 GROUND NOS: 1 AND 2 BEING GENERAL IN NATURE AND NO SPECIFIC ISSUES RAISED, THEY DO NOT SURVIVE FOR ADJUDICATION AND, ACCORDING LY, DISMISSED AS NON- CONSEQUENTIAL. IN THE REMAINING GROUNDS, THE CRUXE S OF THE ISSUES RAISED ARE, FOR THE SAKE OF CONVENIENCE AND CLARITY, REFOR MULATED IN A CONCISE MANNER, AS UNDER: (I) THE AO HAS ERRED IN NOT ACTING UPON THE REVISED RET URN ON THE GROUND THAT THE SAME WAS FILED WHEN THE COMPANY WAS NOT IN EXISTENCE; - NOT APPRECIATING THAT THE REVISED RETURN WAS FILED FOR THE AY UNDER DISPUTE DURING WHICH THE COMPANY EXISTED; - THE CIT(A) ALSO ERRED IN CONFIRMING THE STAND OF TH E AO; - WHEN THE AO ERRED IN TREATING THE REVISED RETURN AS INVALID, THE ASSESSMENT OF A NON-EXISTENT COMPANY BEING INVA LID DESERVES TO BE QUASHED; (II) WITHOUT PREJUDICE, WHILE CONCLUDING THE ASSESSMENT ON THE ORIGINAL RETURN FURNISHED, THE AO ERRED IN - NOT SETTING OFF OF THE CURRENT YEARS BUSINESS LOSS AGAINST THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS AN D INCOME FROM OTHER SOURCES AND NOT ALLOWING THE BU SINESS LOSS REMAINING AFTER SET OFF TO BE CARRIED FORWARD; - AS PER THE GUIDELINES OF BOARDS CIRCULAR, THE SET OFF OF BUSINESS LOSS IS TO BE GRANTED EVEN IN THE ABSENCE OF A SPECIFIC CLAIM IN THE RETURN; (III) THE CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE REVISED RETURN REPLACE THE ORIGINAL RETURN AS PER THE PROVI SIONS OF S.139(5) OF THE ACT AND THAT THE ORIGINAL RETURN WA S FILED WITHIN THE DUE DATE AS PRESCRIBED U/S 139(1) OF THE ACT; & - PRAYER : THE AO BE DIRECTED TO MAKE A FRESH ASSESSMENT BAS ED ON THE REVISED RETURN AND/OR THE SET OFF AND CARRY FORWARD OF LOSS AS CLAIMED BE ALLOWED. 3. THE ISSUE, IN BRIEF, IS THAT THE ASSESSEE FILED ITS RETURN OF INCOME, ADMITTING AN INCOME OF RS.1.83 CRORES ON 30.10.200 4 AND, SUBSEQUENTLY, FURNISHED A REVISED RETURN OF INCOME ON 24.3.2006, CLAIMING A WHOPPING ITA NO.46/BANG/10 PAGE 3 OF 13 LOSS OF RS.23.55 CRORES. IN THE MEANWHILE, THE ASS ESSEE GOT MERGED WITH IGATE GLOBAL SOLUTIONS LIMITED W.E.F. 1.4.2005. ON THE COMPANYS PETITION, THE JURISDICTIONAL HONBLE HIGH COURT IN ITS RULING IN COMPANY PETITION NOS. 155 & 156/2005 DATED 1.3.2006 SANCTIONED THE SCHEME OF AMALGAMATION. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO TOOK A STAND THAT SINCE THE ASSESSEE DID NOT EXIST AFTER THE RUL ING OF THE HONBLE HIGH COURT, THE REVISED RETURN FURNISHED ON 24.3.2006 CA NNOT BE ACTED UPON AS, ACCORDING TO THE AO, IT WAS NOT A VALID RETURN AND, ACCORDINGLY, HE LODGED THE REVISED RETURN AND CONCLUDED THE ASSESSMENT BAS ED ON THE ORIGINAL RETURN FURNISHED ON 30.10.2004. 5. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE BEFORE THE CIT (A) FOR REMEDY. AFTER DUE CONSIDERATION OF THE CONTENTIONS PUT FORTH BY THE ASSESSEE, THE CIT(A) SOUGHT THE COMMENTS OF THE AO ON THE ASSESSEES SUBMISSIONS. THE AO IN HIS REMAND REPORT, AMONG OT HER ASPECTS, SUBMITTED THAT - [P.4. OF CIT(A)S ORDER] 5.. 2. THE LOSS UNDER THE HEAD PROFITS AND GAINS OF BUSIN ESS PERTAINING TO AY 04-05 IS RS.253892890/- AND INCOME FROM OTHER S OURCES IS RS.2.3 CRORES. THERE IS ALSO SHORT TERM CAPITAL GA INS OF RS.15,50,934/-. THE CONTENTION OF THE ASSESSEE IS THAT THE LOSS UNDER THE HEAD PROFITS AND GAINS OF BUSINESS WAS NOT SET OFF AGAINST THE INCOME UNDER THE HEAD CAPITAL GAINS A ND INCOME FROM OTHER SOURCES. IT APPEARS THAT THE CLAIM OF THE ASSESSEE IS IN ORDER. 5.1. HAVING GIVEN DUE WEIGHTAGE TO THE RIVAL SUBMI SSIONS, THE LD. CIT (A) HAD POSED A QUESTION: ITA NO.46/BANG/10 PAGE 4 OF 13 7. THE BASIC QUESTION TO BE ANSWERED IS WHETHER THE REVISED RETURN FILED ON 24.3.2006 BY THE APPELLANT UNDER TH E FACTS AND CIRCUMSTANCES OF THE CASE DESERVES TO BE CONSID ERED AS A VALID RETURN BECAUSE IF IT IS CONSIDERED SO, THEN O NLY THE APPELLANT WILL BE ELIGIBLE AND ENTITLED FOR CLAIM O F SET OFF OF LOSS UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AGAINST THE INCOME FROM OTHER SOURCES AND CAPITAL GAINS AS DISCUSSED IN THE REMAND REPORT DATED 2.9.2007 AND OBSERVED THAT 8.3I FIND THAT FOR ALLOWANCE OF A LOSS CLAIMED IN A TRANSACTION, IT IS MANDATORY ON THE PA RT OF THE ASSESSEE TO FILE SUCH RETURN WITHIN THE TIME SPECIF IED U/S 139(3) OF I.T.ACT WHICH IS NOT THE CASE HERE. HENC E, EVEN IF THE RETURN FILED ON 24.3.06 IS CONSIDERED AS A VALI D RETURN WITHOUT ACCEPTING OR NON-ACCEPTING THE SAME ONLY ON ASSUMPTION THE LOSS CLAIMED THEREIN DOES NOT DESE RVE TO BE ALLOWED WHICH MEANS THE RETURN FILED ON 30.10..04 SUPERSEDES AND HAS TO BE CONSIDERED AS THE BASE MAT ERIAL FOR SCRUTINY WHICH THE AO HAS DONE. HENCE, I FIND NO I NFIRMITY IN ACTION OF AO. 6. AGITATED, THE ASSESSEE HAS COME UP WITH THE PRES ENT APPEAL. DURING THE COURSE OF HEARING, THE LD. A R, IN ESSEN CE, REITERATED MORE OR LESS WHAT WAS URGED BEFORE THE FIRST APPELL ATE AUTHORITY. IN FURTHERANCE, IT WAS SUBMITTED THAT (I) THE AO HAD ERRED IN - NOT ACCEPTING AND ACTING UPON THE REVISED RETURN FI LED ON THE GROUND THAT THE REVISED RETURN WAS FILED WHEN THE C OMPANY WAS NOT IN EXISTENCE; - HOLDING THAT THE REVISED RETURN SO FILED IS NOT A V ALID RETURN, THAT NOT APPRECIATING THAT THE REVISED RETURN WAS F ILED BEFORE THE DATE OF RECEIPT OF THE ORDER OF THE HONBLE HIG H COURT APPROVING THE SCHEME OF THE AMALGAMATION AND THE IN TIMATION THEREOF TO THE REGISTRAR OF COMPANIES; - NOT APPRECIATING THAT THE REVISED RETURN WAS FILED FOR THE A.Y UNDER DISPUTE DURING WHICH THE COMPANY EXISTED; & - THAT THE CIT (A) HAS ERRED IN CONFIRMING THE ORDER WHICH IS TOTALLY CONTRARY TO BOTH THE FACTS AND LAW MAKES TH E ORDER BAD IN LAW WAS LIABLE TO BE QUASHED; ITA NO.46/BANG/10 PAGE 5 OF 13 (II) WITHOUT PREJUDICE, THE AO HAD ERRED IN - NOT SETTING OFF THE CURRENT YEARS BUSINESS LOSS AG AINST THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS AND INCOME FROM OTHER SOURCES; - NOT APPRECIATING THAT THE SET OFF OF BUSINESS LOSS IS TO BE GRANTED EVEN IN THE ABSENCE OF A SPECIFIC CLAIM IN THE RETU RN OF INCOME ON THE BASIS OF THE GUIDELINES OF THE CBDT CIRCULAR S; - NOT ALLOWING THE BUSINESS LOSS REMAINING AFTER SET OFF TO BE CARRIED FORWARD;& - THAT THE CIT (A) HAS ERRED IN CONFIRMING THE SAME; (III) THE CIT(A) HAD ALSO ERRED IN NOT APPRECIATING THE F ACT THAT THE REVISED RETURN REPLACES THE ORIGINAL RETURN AS PER THE PROVISIONS OF S.139(5) OF THE ACT. 6.1. ON THE OTHER HAND, THE LD. D R WAS VERY EMPH ATIC IN HER URGE THAT THE AUTHORITIES BELOW, AFTER DULY ANALYZING THE PRO S AND CONS OF THE ISSUE, HAVE ARRIVED AT A CONCLUSION WITHIN THE PARAMETERS OF THE PROVISIONS OF THE ACT AND, THEREFORE, PLEADED THAT THE IMPUGNED ORDER S OF THE AUTHORITIES BELOW REQUIRE NO INTERFERENCE AT THIS STAGE. 7. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS, D ILIGENTLY PERUSED THE RELEVANT RECORDS AND ALSO THE DOCUMENTARY EVIDE NCE, CASE LAWS PRODUCED IN THE SHAPE OF PAPER BOOKS BY EITHER PART Y. 7.1. TO ARRIVE AT A CONCLUSION IN A JUDICIOUS MANN ER, THE ISSUE IS BEING ANALYZED IN A CHRONOLOGICAL ORDER, AS UNDER: (I) AS PER THE SCHEME OF AMALGAMATION OF QSL W ITH IGATE GLOBAL SOLUTIONS LTD. (IGSL) AND THEIR RESPECTIVE SHAREHOL DERS [SOURCE: PAGE 6 OF PB AR), IT HAS SUBSCRIBED IN PARA 1.2 THAT - 1.2. TRANSFER DATE MEANS THE COMMENCEMENT OF BUS INESS ON 1 ST APRIL, 2005 ITA NO.46/BANG/10 PAGE 6 OF 13 (II) THE ASSESSEE HAD, SUBSEQUENTLY, APPROACHED THE JURISDICTIONAL HONBLE HIGH COURT FOR SANCTION OF THE SCHEME OF AM ALGAMATION. (III) THE HONBLE HIGH COURT, IN ITS RULING REFER RED SUPRA AFTER DULY CONSIDERING THE ISSUE AT LENGTH, WAS PLEASED TO OBS ERVE THAT 6.OFFICIAL LIQUIDATOR HAS NO OBJECTION FOR SANC TIONING THE SCHEME OF AMALGAMATION AND HE HAS FILED HIS REPORT IN OLR 88/2005. SIMILARLY, REGIONAL DIRECTOR, DEPARTMENT OF COMPANY AFFAIRS, CHENNAI, HAS NO OBJECTION TO APPROVE THE S CHEME OF AMALGAMATION. 7. IN THE BACK GROUND OF THIS CASE, SINCE THERE ARE NO OBJECTIONS BOTH BY THE OFFICIAL LIQUIDATOR AS WELL AS BY THE REGION AL DIRECTOR AND AS NO ONE HAS OBJECTED FOR THE AMALGAMATION OF THE SAI D COMPANIES, THESE TWO PETITIONS ARE ALLOWED WITH THE FOLLOWING DIRECTIONS: SCHEME OF AMALGAMATION AS PER ANNEXURE-A PROPO SED BY THE PETITIONERS HEREIN IS SANCTIONED AND IS BINDING ON THE PETITIONERS COMPANIES, THEIR SHAREHOLDERS AND THE CREDITORS . THUS, THE TRANSFER DATE AS PER THE R ULING OF THE HONBLE HIGH COURT REMAINS 1.4.2005 AND VIRTUALLY THE COMMENCEMENT OF BUSINESS BY THE TRANSFEREE COMPANY I.E., IGSL WAS W.E.F. 1.4.2005. (IV) THE ASSESSEES FORCEFUL CONTENTION WAS THAT THE ASSESSEE GOT AMALGAMATED WITH IGSL W.E.F. 1.4.2005 VIDE HIGH CO URTS VERDICT DT. 1.3.2006 APPROVING THE SCHEME OF AMALGAMATION. THE ORDER OF THE HC WAS DELIVERED ON 28.3.06 WHICH WAS INTIMATED TO THE REGISTRAR OF COMPANIES ON 29.3.2006, BUT, THE ASSESSEE FURNISHED A REVISED RETURN ON 24.3.06 ITSELF ADMITTING A LOSS OF RS.23.55 CRORES AND, THUS, THE REVISED RETURN WAS WITHIN THE TIME LIMIT SPECIFIED U/S 139( 5) OF THE ACT, AND THAT THE AUTHORITIES BELOW ERRED IN THEIR STAND AND SO ON SO FORTH. ITA NO.46/BANG/10 PAGE 7 OF 13 (V) IN THIS CONNECTION, WE REFER TO AN IDENTI CAL ISSUE WHICH WAS DEALT WITH BY THE HIGHEST JUDICIARY OF THE LAND IN THE CA SE OF MARSHALL SONS AND COMPANY (INDIA) LIMITED V. ITO REPORTED IN 223 ITR 809. THE ISSUE, IN BRIEF, WAS THAT - WHERE THE SCHEME OF AMALGAMATION SPECIFIES A DATE FROM WHICH THE AMALGAMATION/TRANSFER SHALL TAKE PLACE AND PROV IDES THAT WITH EFFECT FROM THAT DATE, THE TRANSFEROR COMPANY SHALL BE DEEMED TO HAVE CARRIED ON THE BUSINESS FOR AND ON B EHALF OF THE TRANSFEREE COMPANY WITH ALL ATTENDANT CONSEQUENCES AND THE COURTS SANCTION THE SCHEME WITHOUT PRESCRIBING ANY SPECIFIC DATE, THE AMALGAMATION TAKES EFFECT ON THE DATE SPECIFIED IN THE SCHEME. AFTER ANALYZING THE SEQUENCE OF THE ISSUE AT LENGTH , THE HONBLE COURT HAD OBSERVED THAT - WE MAY NOW REFER TO THE SCHEME OF AMALGAMATION AS PASSED AT THE MEETINGS OF THE SHAREHOLDERS OF BOTH THE HOLDING AN D THE SUBSIDIARY COMPANIES. TRANSFEROR COMPANY IS DEFINED TO MEAN THE SUBSIDIARY COMPANY AND THE EXPRESSION TRANSFEREE COMPANY IS DEFINED TO MEAN THE HOLDING COMPANY'. THE EXPRESSION ' THIS S CHEME ' IS DEFINED TO MEAN ' THIS SCHEME IN THE PRESENT FORM O R WITH ANY MODIFICATIONS APPROVED OR IMPOSED BY THE HIGH COURT OF JUDICATURE AT TAMIL NADU AND/OR BY THE HIGH COURT OF JUDICATURE A T CALCUTTA '. THE EXPRESSION ' THE TRANSFER DATE ' IS DEFINED TO MEAN ' JANUARY 1, 1982 ' AND THE EXPRESSION ' THE OPERATIVE DATE ' MEANS THE DATE ON WHICH THE CERTIFIED COPIES OF THE ORDERS OF THE HIGH COURTS O F TAMIL NADU AND CALCUTTA UNDER SECTION 391(2)/394(2) OF THE ACT SHA LL HAVE BEEN FILED WITH THE REGISTRARS OF COMPANIES IN TAMIL NADU AND CALCUTTA, RESPECTIVELY. THE EXPRESSION TERMINAL DATE' IS DEF INED TO MEAN THE DATE IMMEDIATELY PRECEDING THE OPERATIVE DATE. THE SCHEME REFERS TO THE CAPITAL STRUCTURE OF THE TRANSFEROR AND THE TRA NSFEREE COMPANIES, THE OBJECT OF THE SCHEME UNDERLYING THE AGREEMENT B ETWEEN THE PARTIES AND THEN STATES: ' 1. THE UNDERTAKING OF THE TRANSFEROR COMPANY SHAL L, WITH EFFECT FROM AND INCLUDING THE TRANSFER DATE AND WITHOUT FURTHER ACT OR DEED, BE TRANSFERRED TO THE TRANSFEREE COMPANY PURSUANT TO S ECTIONS 391(2) AND 394(2) OF THE ACT AND VEST IN THE TRANSFEREE COMPAN Y WITH ALL THE ESTATE ITA NO.46/BANG/10 PAGE 8 OF 13 AND INTEREST OF THE TRANSFEROR COMPANY BUT SUBJECT, NEVERTHELESS, TO ALL CHARGES AFFECTING THE SAME AND ON THE SAID DATE, TH E TRANSFEROR COMPANY SHALL BE AMALGAMATED WITH THE TRANSFEREE CO MPANY. 6. (A) .. (B) THE TRANSFEROR COMPANY SHALL, WITH EFFECT FROM THE TRANSFER DATE, BE DEEMED TO HAVE CARRIED ON ITS BUSINESS FOR AND ON BEHALF OF THE TRANSFEREE COMPANY, AND ACCORDINGLY THE PROF ITS AND LOSSES OF THE TRANSFEROR COMPANY FOR THE PERIOD COMMENCING FROM THE TRANSFER DATE SHALL BE DEEMED TO BE THE PROFITS OR LOSSES OF THE TRANSFEREE COMPANY AND SHALL BE AVAILABLE TO THE TR ANSFEREE COMPANY FOR DISPOSAL IN ANY MANNER INCLUDING THE DE CLARATION OF ANY DIVIDEND BY THE TRANSFEREE COMPANY AFTER THE OP ERATIVE DATE, SUBJECT TO THE PROVISIONS OF THE ACT. 7. THE IMPLEMENTATION OF THIS SCHEME IS CONDITIONAL UPON THIS SCHEME BEING SANCTIONED UNDER SECTION 391 OF THE AC T AND THE APPROPRIATE ORDERS FOR IMPLEMENTATION OF THIS SCHEM E BEING MADE UNDER SECTION 394 OF THE ACT BY THE HIGH COURTS OF TAMIL NADU AND CALCUTTA. 8 EVERY SCHEME OF AMALGAMATION HAS TO NECESSARILY PR OVIDE A DATE WITH EFFECT FROM WHICH THE AMALGAMATION/TRANSFER SH ALL TAKE PLACE. THE SCHEME CONCERNED HEREIN DOES SO PROVIDE, VIZ., JANUARY 1, 1982. IT IS TRUE THAT WHILE SANCTIONING THE SCHEME, IT IS OPEN TO THE COURT TO MODIFY THE SAID DATE AND PRESC RIBE SUCH DATE OF AMALGAMATION/TRANSFER AS IT THINKS APPROPRIATE I N THE FACTS AND CIRCUMSTANCES OF THE CASE. IF THE COURT SO SPEC IFIES A DATE, THERE IS LITTLE DOUBT THAT SUCH DATE WOULD BE THE D ATE OF AMALGAMATION/DATE OF TRANSFER. BUT WHERE THE COURT DOES NOT PRESCRIBE ANY SPECIFIC DATE BUT MERELY SANCTIONS TH E SCHEME PRESENTED TO IT---AS HAS HAPPENED IN THIS CASE---IT SHOULD FOLLOW THAT THE DATE OF AMALGAMATION/DATE OF TRANSFER IS T HE DATE SPECIFIED IN THE SCHEME AS THE TRANSFER DATE '. IT CANNOT BE OTHERWISE. IT MUST BE REMEMBERED THAT BEFORE APPLYING TO THE COURT UNDER SECTION 391(1), A SCHEME HAS TO BE FRAM ED AND SUCH SCHEME HAS TO CONTAIN A DATE OF AMALGAMATION/TRANSF ER . THE PROCEEDINGS BEFORE THE COURT MAY TAKE SOME TIME; IN DEED, THEY ARE BOUND TO TAKE SOME TIME BECAUSE SEVERAL STEPS PROVI DED BY SECTIONS 391 TO 394A AND THE RELEVANT RULES HAVE TO BE FOLLOWED ITA NO.46/BANG/10 PAGE 9 OF 13 AND COMPLIED WITH . DURING THE PERIOD THE PROCEEDINGS ARE PENDING BEFORE THE COURT, BOTH THE AMALGAMATING UNI TS, I.E., THE TRANSFEROR COMPANY AND THE TRANSFEREE COMPANY MAY C ARRY ON BUSINESS, AS HAS HAPPENED IN THIS CASE, BUT NORMALLY PROVISI ON IS MADE FOR THIS ASPECT ALSO IN THE SCHEME OF AMALGAMA TION. IN THE SCHEME BEFORE US, CLAUSE 6(B) DOES EXPRESSLY PROVID E THAT WITH EFFECT FROM THE TRANSFER DATE, THE TRANSFEROR COMPA NY (SUBSIDIARY COMPANY) SHALL BE DEEMED TO HAVE CARRIED ON THE BUS INESS FOR AND ON BEHALF OF THE TRANSFEREE COMPANY (HOLDING COMPAN Y) WITH ALL ATTENDANT CONSEQUENCES . IT IS EQUALLY RELEVANT TO NOTICE THAT THE COURTS HAVE NOT ONLY SANCTIONED THE SCHEME IN THIS CASE, BUT HAVE ALSO NOT SPECIFIED ANY OTHER DATE AS THE DATE OF TRANSFER/AMALGAMATION. IN SUCH A SITUATION, IT WOUL D NOT BE REASONABLE TO SAY THAT THE SCHEME OF AMALGAMATION T AKES EFFECT ON AND FROM THE DATE OF THE ORDER SANCTIONING THE S CHEME (VI) IN THE CASE ON HAND, SINCE THE JURISDI CTIONAL HONBLE HIGH COURT IN ITS RULING IN THE ASSESSEES OWN CASE REFERRED SUPR A HAD SANCTIONED THE SCHEME OF AMALGAMATION AS PROPOSED BY THE PETITIONE RS WITHOUT ANY MODIFICATION OR ALTER THE TRANSFER DATE; THE RULI NG OF THE HONBLE APEX COURT REFERRED SUPRA IS DIRECTLY APPLICABLE TO THE FACTS OF THE ISSUE IN THE PRESENT CASE, I.E., THE TRANSFER DATE REMAINS 1.4.2005 AND, ACCORDINGLY, THE COMMENCEMENT OF BUSINESS BY THE TRANSFEREE COMPANY IGSL WAS W.E.F. 1.4.2005. THUS, THE VERSION OF THE AO THAT THE COMPANY GOT MERGED WITH M/S.IGATE GLOBAL SOLUTIONS LTD., BANGALORE W.E.F. 1/4/2005. THE ORDER OF THE HONBLE HIGH COURT APPROVING THE MERGER WAS RECEIVED BY THE ASSESSEE ON 1/3/06. SINCE THE COMPANY DID NOT EXIST AFTER THIS DATE, TH E RETURN OF INCOME FILED ON 24/3/06 CANNOT BE ACTED UPON AS IT IS NOT A VALID R ETURN. THEREFORE THE RETURN FILED ON 24/3/06 IS LODGED.. WAS PATENTLY MISCONCEIVED AND AGAINST THE SPIRIT OF THE RULING OF THE HONBLE APE X COURT REFERRED SUPRA. FOR ITA NO.46/BANG/10 PAGE 10 OF 13 THE APPRECIATION OF FACTS AND CLARITY [AT THE COST OF REPETITION], WE VENTURE TO REPRODUCE THE RELEVANT PORTION OF THE FINDING OF TH E HONBLE COURT: 6. (A) THE EXCESS OF THE VALUE.. OF THE TRANSFEREE COMPANY; (B) THE TRANSFEROR COMPANY SHALL, WITH EFFECT FROM THE TRANSFER DATE, BE DEEMED TO HAVE CARRIED ON ITS BUSINESS FOR AND ON BEHALF OF THE TRANSFEREE COMPANY, AND ACCORDINGLY THE PROFITS AND LOSSES OF THE TRANSFEROR COMPANY FOR THE PERIOD COMMENCING FROM T HE TRANSFER DATE SHALL BE DEEMED TO BE THE PROFITS OR LOSSES OF THE TRANSFEREE COMPANY AND SHALL BE AVAILABLE TO THE TRANSFEREE COMPANY FO R DISPOSAL IN ANY MANNER 8 EVERY SCHEME OF AMALGAMATION HAS TO NECESSARILY PR OVIDE A DATE WITH EFFECT FROM WHICH THE AMALGAMATION/TRANSFER SH ALL TAKE PLACE. IT MUST BE REMEMBERED THAT BEFORE APPLYING TO THE COURT UNDER SECTION 391(1), A SCHEME HAS TO BE FRAMED AND SUCH SCHEME HAS TO CONTAIN A DATE OF AMALGAMATION/TRANSFER . THE PROCEEDINGS BEFORE THE COURT MAY TAKE SOME TIME; INDEED, THEY ARE BOUND TO TAKE SOME TIME BECAUSE SEVERAL STEPS PROVIDED BY SECTIONS 391 TO 394A AND THE RELE VANT RULES HAVE TO BE FOLLOWED AND COMPLIED WITH . DURING THE PERIOD THE PROCEEDINGS ARE PENDING BEFORE THE COURT, BOTH THE AMALGAMATING UNI TS, I.E., THE TRANSFEROR COMPANY AND THE TRANSFEREE COMPANY MAY C ARRY ON BUSINESS (VII) FURTHERMORE, S.581ZL (14) OF COMPANIES ACT MAKES IT CLEAR THAT - (14) THE AMALGAMATION, MERGER OR DIVISION OF COMPA NIES UNDER THE FOREGOING SUB-SECTIONS SHALL NOT IN ANY MANNER WHAT SOEVER AFFECT THE PRE-EXISTING RIGHTS OR OBLIGATIONS AND ANY LEGAL PR OCEEDINGS THAT MIGHT HAVE BEEN CONTINUED OR COMMENCED BY OR AGAINS T ANY ERSTWHILE COMPANY BEFORE THE AMALGAMATION, MERGER O R DIVISION, MAY BE CONTINUED OR COMMENCED BY, OR AGAINST, THE CONCE RNED RESULTING COMPANY, OR MERGED COMPANY, AS THE CASE MAY BE. ITA NO.46/BANG/10 PAGE 11 OF 13 THUS, WE ARE OF THE FIRM VIEW THAT THE AO WAS NOT J USTIFIED IN TAKING A STAND THAT SINCE THE COMPANY DID NOT EXIST AFTER THIS DATE, T HE RETURN OF INCOME FILED ON 24/3/06 CANNOT BE ACTED UPON AS IT IS NOT A VALID RETURN. AS A MATTER OF FACT THE ASSESSEE WAS WITHIN ITS REA LM TO FURNISH A REVISED RETURN. HOWEVER, THE PRIME QUESTION NOW IS - WHETHER THE REVISED RETURN FURNISHED ON 24.3.2006 WAS A VALID R ETURN FOR THE AY UNDER DISPUTE? LET US NOW TURN OUR ATTENTION TO HAVE A GLIMPSE OF S.139 (5) OF THE ACT. SECTION 139(5) OF THE ACT : S.139 (5): IF ANY PERSON HAVING FURNISHED A RETURN UNDER SUB-SECTION (1), OR IN PURSUANCE OF A NOTICE ISSUED UNDER SUB-S ECTION (1) OF SECTION 142, DISCOVERS ANY OMISSION OR ANY WRONG STATEMENT THEREIN, HE MAY FURNISH A REVISED RETURN AT ANY TIME BEFORE THE EXP IRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEF ORE THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER . AS PER THE PROVISIONS OF S.139(5)OF THE ACT, THE A SSESSEE WAS OBLIGED TO FURNISH A REVISED RETURN AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE T HE COMPLETION OF THE ASSESSMENT, WHICHEVER WAS EARLIER. IN THE CASE ON HAND, THE ASSESSMENT YEAR UNDER DISPUTE WAS 2004-05 [FOR THE PERIOD FROM 1.4.2003 TO 31.3.2004] AND ACCORDING TO THE PROVISIONS OF S. 139(5) OF THE ACT, THE LAST DATE FOR FILING A REVISED RETURN WAS 31.3.2006 WHER EAS THE ASSESSEE HAD FURNISHED ITS REVISED RETURN ON 24.3.2006 WHICH WAS WITHIN THE STIPULATED TIME FRAME. INCIDENTALLY, THE ASSESSMENT FOR THE A Y UNDER DISPUTE WAS CONCLUDED ONLY ON 29.12.2006. THUS, WE ARE OF THE FIRM VIEW THAT THE ITA NO.46/BANG/10 PAGE 12 OF 13 REVISED RETURN FURNISHED ON 24.3.2006 WAS A VALID RETURN AND THE AO HAD GROSSLY ERRED IN LODGING THE SAME AS AN INVALID RET URN. 7.2. IN TAKING INTO ACCOUNT ALL THESE RELEVANT FACT S AND THE CIRCUMSTANCES OF THE ISSUE AND ALSO IN CONFORMITY WITH THE RULING OF THE HON'BLE APEX COURT REFERRED SUPRA, WE ARE OF THE UNANIMOUS VIEW THAT T HE AO WAS NOT JUSTIFIED IN REFUSING TO ACT UPON THE REVISED RETUR N FURNISHED BY THE ASSESSEE. 7.3. IN A NUT-SHELL THE REVISED RETURN FURNISHED ON 24.3.2 006 BY THE ASSESSEE WAS WITHIN THE TIME LIMIT PRESCRIBED U/S 139(5) OF THE ACT FOR THE REASONS RECORDED IN THE FORE-GOING PARAGRAPHS AND, THUS, TH E AO WAS NOT JUSTIFIED IN CONCLUDING THE ASSESSMENT ON THE BASIS OF ORIGINAL RETURN, LODGING THE REVISED RETURN AS INVALID. WE, THEREFORE, REMIT BAC K THE ENTIRE ISSUE ON THE FILE OF THE AO WITH SPECIFIC DIRECTIONS: (I) TO ENTERTAIN THE REVISED RETURN FURNISHED ON 24.3.2 006 AS A VALID RETURN; (II) TO EXTEND THE BENEFIT OF CARRY FORWARD OF BUSINESS LOSS AND UNABSORBED DEPRECIATION PROVIDED THE ASSESSEE WAS ENTITLED TO SUCH BENEFIT AS PER THE PROVISIONS OF THE ACT AT TH AT RELEVANT TIME; (III) THE AO SHALL, HOWEVER, CARRY OUT THE ABOVE DIRECTIO NS OF THIS BENCH AFTER AFFORDING A REASONABLE OPPORTUNITY TO T HE ASSESSEE OF BEING HEARD. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ITA NO.46/BANG/10 PAGE 13 OF 13 PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF JUNE, 2010. SD/- SD/- ( SMT. P. MADHAVI DEVI ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 18 TH JUNE, 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.