Court held that in terms of the Scheme, the promoters of the company were required to make good any shortfall in the projections under the Scheme. It is stated that the promoters of the company as a part of their contribution, gifted shares of some other companies to the company. The sale of the said shares would result in capital gains and the company sought to avoid payment of tax on such gains. The Scheme did not envisage the promoters’ contributing shares or other assets to make good the shortfall in the projections. The promoters were required to make the shortfall in liquid funds. Thus, the promoters had not complied with the Scheme which they now submit is binding on all other parties. It also appears that the entire exercise of gifting the shares to the company and the company selling the same was with the object of ensuring that the capital gains arise in the hands of the company so as to enable the company to claim further exemption. The promoters could instead of gifting the shares to the company, sell the same and contribute the funds realised for the Scheme. But this would result in the promoters being liable to pay the capital gains tax which it appears, they desired to avoid. Neither the order dt. 26th Feb, 2013 nor the impugned order indicate that the BIFR had examined the transactions, which had led to the capital gains arising in the hands of the company or the context in which additional concessions were sought. In view of the above, the impugned order cannot be sustained. The same is set aside. The IT Department is not required to grant any further concessions contrary to the IT Act, to the company. Company’s contention that the Scheme would be operative notwithstanding that the term as indicated in the Scheme has expired is not sustainable; no modification of the Scheme could be sanctioned requiring the pi Department to give further concessions without the Department consenting to grant such an extension; neither the order dt. 26th Feb., 2013 nor the impugned order indicate that the BIFR had examined the transactions, which had led to the capital gains arising in the hands of the company or the context in which additional concessions were sought; impugned order therefore cannot be sustained.
PDGI v. Indian Plywood Mfg. Co. (P) Ltd(2023) 334 CTR 345 (Delhi) ( HC)
S. 72A : Carry forward and set off of accumulated loss and unabsorbed depreciation-Amalgamation –Capital gains-Exemption-When the scheme is expired no modification of the Scheme could be sanctioned requiring the Income Tax Department to give further concessions without the Department consenting to grant such an extension; neither the order dt. 26th Feb., 2013 nor the impugned order indicate that the BIFR had examined the transactions, which had led to the capital gains arising in the hands of the company or the context in which additional concessions were sought; impugned order therefore cannot be sustained. [S. 45, 74, Insolvency and Bankruptcy Code, 2016, S. 242, Sick Industrial Companies ( Special Provisions) Act, 1985, S. 17, 18, 19, 25, Art. 226]