Asstt. Commissioner of Income Tax-4, Kanpur V. M/s. Reliance Media Works Ltd., Kanpur

ITA 57/LKW/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3229 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-06-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ABHINAV MEHRO TRA PER P
• Keywords: Retrospective amendment; Scheme of amalgamation
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW [BEFORE SHRI S.K.YADAV, JUDICIAL MEMBER & SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ] I.T.A. NO.57/LUC/2011 ASSESSMENT YEAR :2009-10 A.C.I.T.-4, KANPUR -VS- M/S.RELIAN CE MEDIA WORKS LTD., [(FORMERLY KNOWN AS ADLABS FILMS LTD.) (SUCCESSOR TO RAVE ENTERTAINMENT PVT.LTD.)] 117/K/13, GUTAIYA, BIG CINEMA, 2 ND FLOOR, RAWATPUR CROSSING, KANPUR (PAN: AABTK 0549D) ( APPELLANT ) ( RESPONDENT ) DATE OF CONCLUDING THE HEARING : 03.06.2013 DATE OF PRONOUNCING THE ORDER : 28.06.2013 APPEARANCES : FOR THE APPELLANT : SHRI PRAVE EN KUMAR, CIT,DR : FOR THE RESPONDENT : SHRI ABHINAV MEHRO TRA O R D E R PER PRAMOD KUMAR 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 9 TH OCTOBER, 2012 FOR THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING EFFECTIVE GROUND:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A)-I, KANPUR HAS NOT APPRECIATED THE FACTS OF THE CASE AN D HAS TAKEN EFFECTIVENESS OF AMALGAMATION OF ASSESSEE COMPANY WITH M/S. ADLAB S FILMS LTD. FROM 01.04.2008 WHICH IS CONTRARY TO THE FACTS OF ORDER OF HONBLE HIGH COURT, BOMBAY DATED 08.05.2009. 2. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. IT IS A CASE SELECTED FOR SCRUTINY ON THE BASIS OF CASS BUT NO RETURN WAS FILED IN THIS CASE. WHEN ASSESSEE WAS CALLED UPON TO FILE THE RETURN, IT WAS EXPLAINED BY THE ASSESSEE THAT 2 ITA NO.57/LUC/2011 RELIANCE MEDIA WORKS LTD. ASSESSMENT YEAR: 2009-10 SINCE THE ASSESSEE COMPANY STOOD AMALGAMATED IN REL IANCE MEDIA WORKS LTD. W.E.F. 1 ST APRIL, 2008, NO SEPARATE RETURN NEED TO BE FILED. A COPY OF HONBLE BOMBAY HIGH COURTS JUDGMENT DATED 08.05.2009 WAS A LSO PLACED BEFORE THE ASSESSING OFFICER. LEARNED ASSESSING OFFICER, HOWEV ER, REJECTED THESE ARGUMENTS AND HELD AS FOLLOWS:- 2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A SSESSEE. A PERUSAL OF THE CONTENTS OF AFORESAID HONBLE HIGH COURTS, BOM BAY ORDER REVEALED THAT THIS ORDER OF AMALGAMATION OF THE ASSESSEE COMPANY WITH M/S. RELIANCE MEDIA WORKS LTD. (EARLIER KNOWN AS M/S ADLABS FILM S LTD.) WAS MADE ON DATED 08.05.2009 AND AS SUCH IT IS CLEAR THAT THIS AMALGAMATION IS EFFECTIVE FROM SUBSEQUENT DATES AND NOT FROM RETROSPECTIVE D ATE. EVEN THE HONBLE HIGH COURT HAS NO WHERE SUSTAINED THE IMPLEMENTATI ON OF THIS ORDER RETROSPECTIVELY. HOWEVER, ON A PLAIN READING OF HO NBLE COURTS ORDER, IT SEEMS THAT THE ASSESSEE HAS MISINTERPRETED THE ORD ER AND HAS CLAIMED THE EFFECTIVE DATE OF MERGER W.E.F. 01.04.2008 I.E. FR OM THE DATE ON WHICH TRANSFEROR COMPANY IS ALLEGED TO HAVE AMALGAMATED WITH THE HOLDING COMPANY AND NOT ON WHICH DATE HONBLE HIGH COURT A PPROVED THE SCHEME. ASSESSEES THIS INTERPRETATION, IN MY OPINION, IS MISPLACED AS IN MY CONSIDERED OPINION SINCE THE HONBLE HIGH COURT HA S NOT MODIFIED THE ORDER WITH RETROSPECTIVE EFFECT, SO THE IMPLEMENTATION O F THIS ORDER WILL BE W.E.F. 08.05.2009 I.E. ALL THE TRANSACTIONS MADE BY THIS AMALGAMATING COMPANY AFTER THIS DATE WILL BE CONSIDERED IN THE HANDS OF HOLDING COMPANY AND NOT W.E.F. 01.04.2008 AS CLAIMED BY THE ASSESSEE. NOW COMING TO THE FACTS OF THE CASE, SINCE THE ASSESSEE FAILED TO FILE ITS RETURN OF INCOME FOR THE A.Y. 2009- 10 SAY FOR THE COMPUTATION OF INCOME OF THE ASSESS EE FOR THE A.Y. 2009-10, ASSESS IS MADE ON BEST JUDGMENT ASSESSMENT U/S 144 OF THE I.T. ACT BASED ON THE MATERIAL AVAILABLE WITH THE UNDERSIGNED. 3. IN ABSENCE OF ANY DETAILS IN THE FORM OF P.&L . A/C OR BALANCE SHEET WHAT-SO-EVER, THE INCOME OF THE ASSESSEE IS TAKEN AT NIL. 4. FURTHER, IT IS SEEN FROM THE ASSESSMENT ORDER OF PREVIOUS YEAR I.E. IN THE A.Y. 2008-09 THE ASSESSEE COMPANY HAS RECEIVED UNS ECURED LOAN FROM HOLDING COMPANY M/S. ADLABS FILMS LTD. AT RS.32,86 ,36,924.26 AND THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THIS UNSECUR ED LOAN WITH DOCUMENTARY EVIDENCES. SO THESE UNSECURED LOANS FROM THE HOLDI NG COMPANY M/S. ADLABS FILMS LTD. WERE TREATED TO BE UNDISCLOSED INCOME O F THE ASSESSEE U/S 68 OF THE I. T. ACT IN THE PREVIOUS YEAR RELEVANT TO A.Y . 2008-09 AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. SINCE IN THE YEAR UNDER CONSIDERATION ALSO I.E. IN THE A.Y. 2009-10 THE ASSESSEE HAS NOT BROUGHT ANY FRESH EVIDENCE 3 ITA NO.57/LUC/2011 RELIANCE MEDIA WORKS LTD. ASSESSMENT YEAR: 2009-10 WITH REGARDS TO THE GENUINENESS OF THIS UNSECURED LOANS AND ALSO IN ABSENCE OF ANY OTHER DOCUMENTS OTHERWISE JUSTIFYING THESE UNSECURED LOANS, THE SAME IS LIABLE TO BE ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE I.T. ACT THIS YEAR ALSO I.E. IN THE A.Y. 2009-10. PENAL TY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT ON THE SAME FOR FURNISHING OF INAC CURATE PARTICULARS AND CONCEALMENT OF INCOME SHALL ALSO BE INITIATED ON T HIS UNDISCLOSED INCOME. ( ADDITION OF RS.32,86,36,924.26 ) 3. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL . LEARNED CIT(A) ANNULLED THE ASSESSMENT ON THE GROUND THAT THE COMPANY CEASE D TO EXIST W.E.F. 1 ST APRIL, 2008. IN HIS BRIEF ORDER, LEARNED CIT(A) HELD AS FO LLOWS:- 4. DISCUSSION & DECISION : I HAVE GONE THROUGH THE ORDER OF AMALGAMATION (AS PASSED BY THE HONBLE BOMBAY HIGH COURT DATED 08.05.2009) OF THE APPELLANT COMPANY WITH M/S. ADL ABS FILMS LTD. AS PER THIS ORDER, THE SCHEME OF AMALGAMATION SHALL BE EF FECTIVE FROM THE APPOINTED DATE, WHICH IS 01.04.2008. THAT MEANS TH E APPELLANT COMPANY CEASED TO EXIST FROM 01.04.2008 AS IT GOT AMALGAMA TED M/S. ADLABS FILMS LTD. ON THAT DATE. THE COMPANY SECRETARY OF RELIAN CE MEDIA WORKS LTD. HAS ALSO SUBMITTED AN AFFIDAVIT (REPRODUCED ABOVE) TO THE SAME EFFECT WHEREIN IT HAS ALSO BEEN CATEGORICALLY STATED THAT ALL THE AS SETS AND LIABILITIES OF THE APPELLANT COMPANY HAD BEEN TRANSFERRED TO M/S. ADL ABS FILMS LTD. AS FROM 01.04.2008. IN VIEW OF THIS LEGAL FACT, I HOLD THA T THE APPELLANT COMPANY HAD NO EXISTENCE AS ON 01.04.2008 AND, THEREFORE, THE SAME COULD NOT HAVE BEEN A TAXABLE ENTITY DURING THE F.Y. 2008-09. ACCORDIN GLY, THE ASSESSMENT FRAMED ON A NON-EXISTENT COMPANY IS BEING ANNULLED . 4. YET, THE ASSESSING OFFICER IS NOT SATISFIED AND IS IN APPEAL BEFORE US. 5. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIALS AVAILABLE ON RECORD, WE SEE NO REASONS TO INTERFERE IN THE MATTER. NEITHER THERE IS ANY DISPUTE ABOUT THE FACTUAL POSITION THAT THE EFF ECTIVE DATE OF MERGER WAS 1 ST APRIL, 2008, AS EVIDENT FROM HONBLE BOMBAY HIGH CO URTS JUDGMENT PLACED BEFORE US AT PAGES 1 TO 18 OF THE PAPER BOOK NOR CO ULD IT BE DISPUTED THAT ONCE A COMPANY STANDS AMALGAMATED IN ANOTHER COMPANY, IT C EASES TO HAVE ITS LEGAL EXISTENCE AND CANNOT, THEREFORE, BE ASSESSED TO TAX . IN THE CASE OF SARSWATI INDUSTRIAL SYNDICATE-VS- CIT (186 ITR 278), HONBLE SUPREME COURT HAS HELD SO. 4 ITA NO.57/LUC/2011 RELIANCE MEDIA WORKS LTD. ASSESSMENT YEAR: 2009-10 6. NO DOUBT, HONBLE BOMBAY HIGH COURTS JUDGMENT O N AMALGAMATION IS DATED 8 TH MAY, 2009 BUT IT IS CATEGORICALLY STATED IN THE AM ALGAMATION SCHEME SO APPROVED BY THEIR LORDSHIPS THAT THE APPOINTED DAT E MEANS 1 ST DAY OF APRIL 2008. WHEN LEARNED DEPARTMENTAL REPRESENTATIVE WAS CONFRO NTED WITH THIS POSITION, HE DID NOT HAVE ANYTHING TO SAY. HE SIMPLY SUBMITTED T HAT DATE OF HONBLE HIGH COURTS JUDGMENT IS DATED 8 TH MAY, 2009. WE DO NOT THINK LEARNED DEPARTMENTAL REPRESENTATIVE IS SO NAVE AS TO MISS THE VITAL DIS TINCTION BETWEEN DATE OF ORDER AND THE DATE FROM WHICH AMALGAMATION IS EFFECTIVE. IT I S INDEED A SAD COMMENTARY ON THE STATE OF AFFAIRS THAT SUCH FRIVOLOUS APPEALS AR E FILED BEFORE US. WE LEAVE IT AT THAT. 5. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 28 TH JUNE, 2013 SD/- SD/- (S. K. YADAV) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH JUNE, 2013 TALUKDAR COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2 RESPONDENT 3. THE CIT(A), 4. CIT, 5. DR, LUCKNOW BENCHES, LUCKNOW TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT 5 ITA NO.57/LUC/2011 RELIANCE MEDIA WORKS LTD. ASSESSMENT YEAR: 2009-10