Case Law Details
DCIT Vs Trans Asia Packaging Ltd (ITAT Delhi)
Introduction: The Income Tax Appellate Tribunal (ITAT), Delhi, in the case of DCIT Vs Trans Asia Packaging Ltd, addressed a crucial issue relating to transactions between amalgamated companies. The ITAT held that transactions between two units of a single entity post amalgamation cannot be considered as infringing Section 269SS of the Income Tax Act, thereby deleting the penalty imposed under Section 271D.
Analysis: The case in question revolved around a penalty imposed on Trans Asia Packaging Ltd. (TAPL) under Section 271D of the Act for allegedly receiving loans and deposits contravening Section 269SS of the Act. TAPL contended that as it was amalgamated with Asia Consolidated Industries Ltd. (ACIL), and thereby lost its independent identity, transactions between TAPL and ACIL should be regarded as internal movements of funds within a single entity, not infringing the provisions of Section 269SS. The CIT(A) found merit in this argument, leading to the deletion of the penalty. Upon appeal by the Revenue, ITAT upheld the decision of CIT(A), reinforcing the concept that transactions between amalgamated entities are not in the ambit of Section 269SS of the Act.
Conclusion: This case marks a significant ruling, providing clarity on the applicability of Section 269SS in the case of amalgamated companies. The ITAT’s decision reiterates the principle that amalgamated entities are regarded as a single entity for tax purposes, thereby exempting transactions between them from the provisions of Section 269SS. This ruling can have far-reaching implications for similar cases, shaping the tax landscape for amalgamated entities.
FULL TEXT OF THE ORDER OF ITAT DELHI
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