Ca/123/2004 Of Jindal Iron And Steel Co. Ltd v. Asst. Commissioner Of Income-Tax,(Intervednor)

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONCOMPANY APPLICATION NO.123 OF 2004 IN COMPANY PETITION NO.76 OF 2004CONNECTED WITHCOMPANY APPLICATION NO.562 OF 2003 Jindal Iron and Steel Company Ltd.(JISCO) a company incorporatedunder the Companies Act, 1956having its Registered Officeat Jindal Mansion,5A, Dr. G.Deshmukh, Mumbai-400 026. ...Applicant. And Assistant Commissioner ofIncome Tax 5(2), Mumbaihaving office at AayakarBhavan, M.K. Road,Mumbai - 400 020. ...Intervenor --- Mr. Iqbal Chagla with Mr. Janak Dewarkadas, Mr. D.Khambata, Mr. Virag Tulzapurkar, Mr. Jagangir D.Mistri, Mr. Sanjay Irani i/b M/s. Rajani Associates,Advocate for the applicant. Mr. B.Chaterjee i/b T.C. Kaushik for the Intervenorin support. CORAM: V.M. KANADE, J.DATE : 2nd September, 2004. ORAL ORDER: The said application is accompanied by an affidavit of the Assistant Commissioner of Income-tax. He also relied upon the Judgment of the Delhi HighCourt in the case of Mohan Exports India Ltd., In re.reported in 95 Company Cases, page 53in support ofhis submission that the Court, while exercising itsjurisdiction under sections 391 and 394 of theCompanies Act can reject the scheme which has beenfiled with an ulterior motive of tax evasion. Hefurther relied upon the Judgment of the Apex Court inthe case of Miheer H. Mafatlal vs. MafatlalIndustries Ltd. reported in 87 Company Cases, page792and submitted that the Apex Court hadcategorically stated that in the case of tax fraud theCourt may reject the merger or amalgamation.3. The learned Counsel appearing on behalf of theIncome-tax Department further submitted that thepetitioners were not entitled to the benefit undersection 72-A of the Income-tax Act and that, for thefirst time, in 1989, the Company had shown taxableprofit and tax liability with reference to News-paperAdvertisement. He further relied upon the reportsubmitted by M/s. Kalyaniwala Mistri, CharteredAccountant which, according to the learned Counselappearing on behalf of the Interveners, held that ifthe proposed scheme is allowed there is danger ofbankruptcy of the Company. The learned Counsel case as, S.E.B.I., according to the learned Counsel, is not a regulatory body and not a creditor. :8: 6. Shri Chatterjee, the learned Counsel appearing on case as, to my mind, there is no violation of any provisions of any taxing statute. :11:not expressed any opinion on the plea oflearned counsel for the Revenue that theamalgamation itself is a device designedto evade the taxes legitimately payableby the subsidiary company. If theincome-tax authorities think that theyare entitled to raise this question inthe proceedings under the Income-tax Act,it is open to them to do so by way of aseparate proceeding according to law." Income-tax Act and it is open for them to do so by way of separate proceedings according to law. :12:has clearly got earmarked. The following broad contours of such jurisdiction have emerged : meetings as contemplated by section 391(1)(a) have been held. legitimately bind even the dissenting members of that class. therefore, the said judgment is not applicable to the Income-tax Department, cannot be accepted. 9. In the result, Company Application is dismissed. 10. Copy of this order duly authenticated by theCompany Registrar of this Court be supplied to theparties. V.M. KANADE, J.