The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 271E of the Income Tax Act 1961 holding that the transaction between 2 companies could not come under Section 269SS of the Income Tax Act upon amalgamation.
Thee assessee Trans Asia Packaging Ltd.(TAPL) was a limited company engaged in manufacturing of tin containers and cans etc.
The Assessing Officer in the course of assessment proceedings for Assessment Year 1993-94 in question observed that the assessee had received certain loans and deposits in contravention of the provision of Section 269SS of the Income Tax Act.
It was submitted that TAPL could not be considered as separate entity as contemplated under Section 269SS of the Income Tax Act and consequently the transaction between TAPL and the amalgamated assessee company could at most be considered as transaction between two units of a single entity and not transaction with two distinct units.
Meen bnakshi Dohre, on behalf of the revenue relied upon the penalty order.
The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) dismissed the appeal filed by the department and observed that Trans Asia Packaging Ltd. (TAPL) was amalgamated with Asia Consolidated Industries Ltd. (ACIL) w.e.f. 01.04.1992 and had become a unit of the assessee-company.
By virtue of order of Punjab and Haryana High Court, the assessee company was merged/amalgamated with Asian Consolidated Company Ltd. w.e.f. 01.04.1992 and from that date, became unit of amalgamated company, i.e., Asian Consolidated Industries Ltd.
The Bench held that transaction between the TAPL and ACIL should be regarded as transaction between two units of the same company due to merger and transactions between the two companies were out of ambit of Section 269SS of the Income Tax Act.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
