Amalgamated company cannot be taxed

The Supreme Court has upheld the judgment of the Delhi High Court in the case, CIT vs Maruti Suzuki India. The high court had agreed with the decision of the Income Tax Appellate Tribunal. The tribunal had held that the assessment made in the name of Suzuki Powertrain India was a nullity since it had been amalgamated Into Maruti Suzuki India and was not in existence.

The Supreme Court dismissed the appeal of the Commissioner of Income Tax, its judgment asserted that the legal question raised in this case had already been settled. It observed: “Despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation.”

The judgment stressed that there should be certainty in matters of tax. Otherwise, “it will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable,” the judgment emphasised.