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

Citation: [1996] SUPP. 9 S.C.R. 216 · Decided: 27-11-1996 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Appeal(s) allowed

Judgment (excerpt)

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 change was permitted subject to certain 
conditions. Both the companies passed resolutions for a~algamation of 
Subsidiary .Company with the Holding Company. Scheme of Amalgama· 
tion was prepared wherein 1.1.82 was mentioned as date of transfer and it 
F was also mentioned that with effect from the date of transfer, the Sub-
sidiary Company shall be deemed to have carried oii business for and on 
behalf of Holding Company. 
The Holding Company and the Subsidiary Company filed petitions 
G for amalgamation before the Company Courts at Calcutta and Madras 
respectively, and the scheme of amalgamation was sanctioned on 21.11.83 
and 11.1.83 respectively without specifying any other date for amalgama· 
tion. The name of the Subsidiary Company was struck off by the Registrar 
of Companies, Madras on 21.1.86. 
H 
Income Tax authorities gave notice u/s 139(2) of Income Tax Act, to 
216 
MARSHALL SONS AND CO. (I) LID. v. 1.T.O. 
217 
the Subsidiary Company to file return for the Assessment Year 1984-85 A 
(for the year ending June, 1983) and for Assessment Year 1985-86 [for the 
year ending June, 1984). The Company replied to the authorities that since 
it amalgamated with the Holding Company w.e.f. 1.1.82, the question of 
filing returns for the years above-mentioned does not arise. Income Tax 
Officer then sent notice u/s 142(1), against which the company filed writ 
petition in the High Court on the ground that Income Tax Officer had no 
authority to caII upon Subsidiary Company to file return for the period 
subsequent to the date on which it was amalgamated. The High Court 
dismissing the writ petition held that in absence of any date specified by 
the Company Court, the date of order passed by the Company Court shaII 
be taken as the date of amalgamation. 
In appeal to this Court, 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, and that after 
B 
c 
the date of amalgamation, the business carried on by the Subsidiary 
Company was as an agent of and for and on behalf of the Holding D 
Company. The respondent contended that the Subsidiary Company can be 
said to have ceased to exist only wheil the name of the Subsidiary Company 
was struck off from the Registrar of Companies, Madras. 
Allowing this appeal, this Court 
HELD : 1. The notices issued by the Income Tax Officer, were not 
warranted in law. The business carried on by the Transferor Company 
[Subsidiary Company] should be deemed to have been carried on for and 
E 
on behalf of the Transferee Company. This is the necessary and the logical 
consequence of the Court sanctioning the scheme of amalgamation as 
F 
presented to it. The order of the Court sanctioning the Sche.me, the filing 
of the certified copies of the orders of the Court before the Registrar of 
Companies, the aIIotment of Shares etc. may have all taken place sub-
sequent to the date of amalgamation/transfer, yet the date of amalgama-
tion in the circumstances of this case would be January 1, 1982. [231-C-E] G 
Reghubar Dayal v. The Bank of Upper India Ltd., AIR (1919) P.C., 9, 
relied on. 
Sahayanidhi [Virudhnagarj Ltd. v.A.R.S. Subramaniam Nadar, (1950) 
. 20 Company Cases 214; United India Life Assuranc

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