In Re AVM Capital Services Private Limited (Bombay High Court)
A scheme of arrangement u/s 391 to 394 of the Companies Act was entered into which provided that five private limited companies would be merged with Unichem Laboratories. Pursuant to the Scheme, (a) the entire undertaking of the transferor companies would stand vested with the transferee, (b) The shares held by the transferor companies in the transferee company would be cancelled & (c) shares of the transferee company would be issued to the shareholders of the transferor companies. The scheme was challenged by a shareholder on the ground that it was propounded to avoid capital gains tax that would have arisen if the transferor companies would have directly transferred their shares to the promoters and that it was a “colourable device to evade tax”. Reliance was placed on McDowell 154 ITR 148 (SC), Wood Polymer 47 CC 597 (Guj) & Groupe Industrial Marcel Dassault (AAR). HELD by the High Court rejecting the objection.
A scheme of arrangement u/s 391 to 394 of the Companies Act was entered into which provided that five private limited companies would be merged with Unichem Laboratories. Pursuant to the Scheme, (a) the entire undertaking of the transferor companies would stand vested with the transferee, (b) The shares held by the transferor companies in the transferee company would be cancelled & (c) shares of the transferee company would be issued to the shareholders of the transferor companies. The scheme was challenged by a shareholder on the ground that it was propounded to avoid capital gains tax that would have arisen if the transferor companies would have directly transferred their shares to the promoters and that it was a “colourable device to evade tax”. Reliance was placed on McDowell 154 ITR 148 (SC), Wood Polymer 47 CC 597 (Guj) & Groupe Industrial Marcel Dassault (AAR). HELD by the High Court rejecting the objection.
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