Income Tax, Issue Update

Timeline for filing revised return pursuant to scheme of amalgamation/merger/demerger approved by National Company Law Tribunal


Outcome: Remand


  • The Assessee Company had filed the original return of income on 28.09.2010 showing total income of Rs. 8.67 crores. On 13.09.2010 and 06.10.2010, the Assessee company and M/s. Star Ya Limited, a company having its registered Office in Bombay filed a Joint Petition before the Hon’ble High Court of Calcutta and Hon’ble High Court of Bombay for demerger of ‘Vortal’ division of M/s. SYK Ltd. under sections 391(2) and 394 of the Companies Act, 1956 with the Assessee Company. The said scheme of demerger was duly approved by the respective Hon’ble High Court at Calcutta and Hon’ble High Court of Bombay on 08.03.2011 and 21.04.2011 respectively. The appointed date of the scheme was 01.03.2010, being the effective date of demerger, which fell within the relevant assessment year 2010-11.
  • Pursuant to the scheme of merger approved by the Hon’ble High Courts, the Assessee filed a revised return of income on 09.06.2011 showing income of Rs. Nil after getting approval of Annual General Meeting of Assessee Company. Subsequently, the case was selected for scrutiny assessment under Computer Aided Scrutiny Service. Notices under sections 143(2) and 142(1) of the Income-tax Act, 1961 on 29.08.2011 were issued and served on the Assessee and thereafter again a notice under section 142(1) of the Act dated 16.10.2012 was issued to the Assessee. Assessee submitted various replies substantiating his claim. However, the Assessing Officer did not appreciate the submissions of the Assessee and refused to take cognizance of the said revised return of income filed on 09.06.2011, wherein the Assessee Company had claimed the set off of brought forward losses and unabsorbed depreciation of ‘Vortal’ division merged into the Assessee Company with effect from 01.03.2010.

Key Points

  • Reliance was placed on the decision of Hon’ble Supreme Court in the case of Dalmia Power Ltd vs ACIT, wherein it was concluded that “it was incumbent upon Department to assess total income of successor in respect of previous assessment year after date of succession. Thus, where predecessor companies/ transferor companies were succeeded by appellants/ transferee companies who had taken over their business along with all assets, liabilities, profits and losses etc., in view of provisions of section 170(1), Department was required to assess income of appellants after taking into account revised returns filed after amalgamation of companies.”
  • Moreover, Section 139(5) of the Act states that an Assessee can file a revised return of income before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever was earlier. In the instant case the Assessee had furnished the revised return of income under section 139(5) of the Act on 09.06.2011. The last date of filing the revised return of income was 31.03.2012, being one year from the end of the relevant assessment year. And the assessment order under section 143(3) of the Act was passed on 28.03.2013. As such, the return of income was filed on time by the Assessee. However, the Assessing Officer has opined that since the intimation under section 143(1) of the Act was passed on 14.04.2011, the Assessee lost its right to file a revised return thereafter, was on wrong understanding of law and so the reason of Assessing Officer failed.
  • Thus, it was inferred that the intimation issued under section 143(1) of the Act did not preclude the Assessee from filing a revised return of income. More so, when assessment order under section 143(3) of the Act was also passed in the present case of the Assessee, the intimation under section 143(1) of the Act had lost its importance. It was also pertinent to mention the fact that the Assessee had rightly filed the revised return of income under section 139(5) of the Act within the stipulated time frame as per statute and hence, the Assessing Officer was bound to accept the revised return filed by the Assessee.

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