Comprehension
Supreme Court of India has pointed out that there are not less than 100 instances under the Income Tax Act, 1961, where in the event of amalgamation, the method of treatment of a particular subject matter is expressly indicated in the provisions of the Act. In some instances, amalgamation results in withdrawal of a special benefit (such as an area exemption under Section 80IA) - because it is entity or unit specific. In the case of carry forward of losses and profits, a nuanced approach has been indicated. All these provisions support the idea that the enterprise or the undertaking, and the business of the amalgamated company continues. The beneficial treatment, in the form of set-off, deductions (in proportion to the period the transferee was in existence, vis-à-vis the transfer to the transferee company); carry forward of loss, depreciation, all bear out that under the Act, (a) the business-including the rights, assets and liabilities of the transferor company do not cease, but continue; (b) by deeming fiction-through several provisions of the Act, the treatment of various issues, is such that the transferee is deemed to carry on the enterprise as that of the transferor.
Question: 1
Consider the given statements:
(I) Amalgamation is the merger of one or more companies with another company.
(II) Amalgamation may be the merger of two or more companies to form a new company.
(III) The amalgamating company integrates with amalgamated company and the former is dissolved without winding up.
Choose the correct answer from the Code given below:
Consider the given statements:
(I) Amalgamation is the merger of one or more companies with another company.
(II) Amalgamation may be the merger of two or more companies to form a new company.
(III) The amalgamating company integrates with amalgamated company and the former is dissolved without winding up.
Choose the correct answer from the Code given below:
(I) Amalgamation is the merger of one or more companies with another company.
(II) Amalgamation may be the merger of two or more companies to form a new company.
(III) The amalgamating company integrates with amalgamated company and the former is dissolved without winding up.
Choose the correct answer from the Code given below:
Updated On: Jul 11, 2024
- Only (I) and (II) are true.
- Only (II) and (III) are true.
- Only (I) and (III) are true.
- (I), (II) and (III) are true.
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The Correct Option is D
Solution and Explanation
The Correct Answe is option (D): (I), (II) and (III) are true.
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Question: 2
On amalgamation of a company,
On amalgamation of a company,
Updated On: Jul 11, 2024
- There is transfer of capital assets from amalgamating company to amalgamated company and therefore capital gain can arise in the hands of the amalgamating company.
- There is transfer of capital assets from the amalgamating company to amalgamated company and hence capital gain can arise in the hands of the shareholders of the amalgamating company.
- Succession of capital assets of the amalgamating company by the amalgamated company does not result in transfer as defined in Section 47 of the Income Tax Act and hence no capital gain arises.
- All are incorrect.
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The Correct Option is C
Solution and Explanation
The Correct Answe is option (C): Succession of capital assets of the amalgamating company by the amalgamated company does not result in transfer as defined in Section 47 of the Income Tax Act and hence no capital gain arises.
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Question: 3
In case of amalgamation,
In case of amalgamation,
Updated On: Jul 11, 2024
- Amalgamated company can set off the losses of the amalgamating company, if conditions of Income Tax Act, 1961 are complied with.
- New company can claim depreciation on capital assets in the year of transfer on pro-rata basis.
- New company can carry forward unabsorbed depreciation.
- All are true.
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The Correct Option is D
Solution and Explanation
The Correct Answe is option (D): All are true.
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Question: 4
Consider the given statements:
(I) In case of amalgamation, transferee-company can claim deduction for expenditure incurred on amalgamation.
(II) Any cessation of liability of amalgamating company shall be taxed in the hands of the amalgamated company.
Choose the correct answer from the Code given below
Consider the given statements:
(I) In case of amalgamation, transferee-company can claim deduction for expenditure incurred on amalgamation.
(II) Any cessation of liability of amalgamating company shall be taxed in the hands of the amalgamated company.
Choose the correct answer from the Code given below
(I) In case of amalgamation, transferee-company can claim deduction for expenditure incurred on amalgamation.
(II) Any cessation of liability of amalgamating company shall be taxed in the hands of the amalgamated company.
Choose the correct answer from the Code given below
Updated On: Jul 11, 2024
- Both (I) and (II) are true.
- Only (I) is true.
- Only (II) is true.
- Both (I) and (II) are untrue.
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The Correct Option is A
Solution and Explanation
The Correct Answe is option (A):Both (I) and (II) are true.
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Question: 5
Which of the following is true?
Which of the following is true?
Updated On: Jul 11, 2024
- The accumulated loss of the amalgamating company shall be deemed to be the loss of the amalgamated company for the previous year in which the amalgamation was effected.
- The amalgamated company can claim all deductions under Section 80 of IncomeTax Act, 1961 including unit specific deductions.
- The accumulated loss of the amalgamating company shall not be deemed to be the loss of the amalgamated company
- All are incorrect
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The Correct Option is A
Solution and Explanation
The Correct Answe is option (A): The accumulated loss of the amalgamating company shall be deemed to be the loss of the amalgamated company for the previous year in which the amalgamation was effected.
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Question: 6
Consider the given statements:
(I) On amalgamation, the business of the transferor company does not cease, but is deemed to continue.
(II) Under various provisions of the Income Tax Act, transferee is deemed to carry on the enterprise as that of the transferor.
Choose the correct answer from the Code given below:
Consider the given statements:
(I) On amalgamation, the business of the transferor company does not cease, but is deemed to continue.
(II) Under various provisions of the Income Tax Act, transferee is deemed to carry on the enterprise as that of the transferor.
Choose the correct answer from the Code given below:
(I) On amalgamation, the business of the transferor company does not cease, but is deemed to continue.
(II) Under various provisions of the Income Tax Act, transferee is deemed to carry on the enterprise as that of the transferor.
Choose the correct answer from the Code given below:
Updated On: Jul 19, 2024
- Both (I) and (II) are true.
- Only (I) is true.
- Only (II) is true.
- Both (I) and (II) are untrue.
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The Correct Option is A
Solution and Explanation
The Correct Answe is option (A): Both (I) and (II) are true.
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Top Questions on Tax Law
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- The Hon’ble Supreme Court in the case of ‘Nil Ratan Kundu and another v. Abhijit Kundu’ 2008(3) Apex Court Judgements 232 (SC), while granting the custody to the maternal grandparents observed: In our judgement, the law relating to custody of a child is fairly well settled and it is this. In deciding a difficult and complex question as to custody of minor, a Court of law should keep in mind relevant statutes and the rights flowing therefrom. But such cases cannot be decided solely by interpreting legal provisions. It is a humane problem in live in relationship and is required to be solved with human touch. A Court while dealing with custody cases, is neither bound by statutes nor by strict rules of evidence or procedure nor by precedents. In selecting proper guardian of a minor, the paramount consideration should be the welfare and well-being of the child. In selecting a guardian, the Court is exercising parens patriae jurisdiction and is expected, may bound, to give due weight to a child’s ordinary comfort, contentment, health, education, intellectual development and favorable surroundings. But over and above physical comforts, moral and ethical values cannot be ignored. They are equally, or we may say, even more important, essential and indispensable consideration. If the minor is old enough to form an intelligent preference or judgement, the Court must consider such preference as well, though the final decision should rest with the Court as to what is conducive to the welfare of the minor.
The Hon’ble Supreme Court in the case of ‘Gaurav Nagpal v. Semedha Nagpal’-(2009)1 SCC 42, while giving paramount importance to the welfare of the child, which should include moral and ethical values, besides ethical well-being, observed as under:
When the court is confronted with conflicting demands made by the parents, each time it has to justify the demands. The Court has not only to look at the issue on legalistic basis, in such matters human angles are relevant for deciding those issues. The Court then does not give emphasis on what the parties say, it has to exercise a jurisdiction which is aimed at the welfare of the minor. As observed recently in Mausami Moitra Ganguli case, the Court has to give due weightage to the child’s ordinary contentment, health, education, intellectual development and favorable surroundings, but over and above physical comforts, the moral and ethical values have also to be noted. They are equal if not more important than the others.
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(Extracted with Edits from R.K. Jain v. Union of India, 1993 (4) SCC 119)- CLAT PG - 2025
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The impugned constitutional amendments by which Article 16 (4-A) and 16 (4-B) have been inserted, flow from Article 16 (4). They do not alter the structure of Article 16 (4). They retain the controlling factors or the compelling reasons which enables the State to provide for reservation keeping in mind the overall efficiency of the state administration under article 335. Sub-categorization within a class is a constitutional requirement to secure substantive equality in the event that there is a distinction between two sections of a class; Sub-classification must not lead to the exclusion of one of the categories in the class. A model that provides sufficient opportunities to all categories of the class must be adopted; and Sub-classification among a class must be on a reasonable basis.
Justice Bela Trivedi opined, in dissent, that presidential list of scheduled castes notified under Article 341 cannot be altered by the States. Any change to this list can only be made by a law enacted by Parliament. Sub-classification, according to her would amount to tampering with the Presidential List and undermine the object Article 341, which aims to eliminate political influence in the SC-ST List. Further, she emphasised the importance of adhering to the rule of plain and literal interpretation. She mentions that any preferential treatment for a sub-class within the presidential list would deprive other classes within the same category of their benefits. In the absence of executive or legislative power, state lack the competence to sub-classify castes and the benefit reserved for all SCs. Allowing states to do so would constitute a colourable exercise of power, which is impermissible under law. Justice Trivedi concluded by affirming that affirmative action by States must remain within constitutional boundaries and held that the law laid down in E.V. Chinnaiah case was correct and should be upheld.
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