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3. M/s Rajam Finance and Investment India Limited is a wholly owned subsidiary of M/s Investment Trust of India Limited (ITI old). As per the scheme of amalgamation, ITI (Old) had to hive off its NBFC business w.e.f. 01.09.2002 to Rajam Finance and Investment India Ltd., who is the appellant right now and since it has changed its name from Rajam Finance and Investment India Ltd. to The Investment Trust of India Ltd., hereinafter it will be referred to as (ITI New). As a result, HFCL Infotel Limited (old) merged into ITI Limited (old) w.e.f 1.9.2002 and ceased to ITA Nos. 80, 728 & 1377/Chny/2008, 498/Chd/2007 & 1809/Chny/2014 exist thereafter. At the same time, ITI Limited (old) wants to concentrate on their newly chosen Telecom business, exited from Finance Business (a non- infrastructure business U/s 10(23)(G) and hived off the assets & liabilities of the NBFC business to its 100% subsidiary company namely Rajam Finance & Investment (I) Limited. w.e.f 1.9.2002. This business rearrangement was also part and parcel of the Scheme as approved by the two Hon'ble High Courts. The Scheme was duly implemented and thereafter, ITI Limited (old) continued to carry on Telecom business and Rajam, i.e., ITI Limited (new) continued to carry on Finance business. Since the telecom business was being operated in Punjab, ITI Limited (old) moved its registered office from Chennai to Chandigarh after obtaining all the necessary approvals from the Government. M/s Rajam, i.e., ITI Limited (new) continued to carry on the Finance business from ITA Nos. 80, 728 & 1377/Chny/2008, 498/Chd/2007 & 1809/Chny/2014 Chennai since its clients, existing assets etc. were located in and around Chennai.

21. Now in the instant case also, more or less similar situation has arisen, in the sense that both the amalgamation of HFCL lnfotel Limited into ITI Limited (Old) as well as the hiving off of financial business of ITA Nos. 80, 728 & 1377/Chny/2008, 498/Chd/2007 & 1809/Chny/2014 ITI Limited (Old) to Rajam Finance and Investment Ltd., i.e., ITI Limited (new) are part of the same scheme of amalgamation sanctioned by Hon'ble Madras High Court as well as Hon'ble Punjab and Haryana High Court. The scheme presented for amalgamation has mentioned this fact of the sale of share in July, 2002 as well as the sale of hire purchase, leasing and securities trading business as, a going concern to Rajam Finance and Investment (India) Ltd. i.e. ITI Limited (new) and after reading the affidavit of Regional Director Southern Region, Department of Company Affairs dt. 19.03.2003 filed before the Hon'ble Madras High Court on 20.03.2003 wherein the Central Government had no objection for the approval of the scheme of amalgamation, the Hon'ble High Court sanctioned the scheme of amalgamation. Hence, prior to examining the contention of the AO that since ITI Limited (new) is the real ITI Limited (old) because of ITA Nos. 80, 728 & 1377/Chny/2008, 498/Chd/2007 & 1809/Chny/2014 transfer of assets and liabilities and several other things from the latter to the former, it is essential here to consider that if for the sake of argument it is accepted that ITI Limited (new) is the real ITI Limited (old), is it within the power of the Assessing Officer of the instant case even after Azadi Bachao Andolan case (supra) to ignore the effects of amalgamation of HFCL lnfotel Ltd regarding set off of carried forward loss and depreciation and tax the income of the ITI Limited (old), on the basis of his observation regarding transfer of assets and liabilities and utilization of fund, in the hands of ITI Limited(new). In our opinion, the AO of the instant case has exceeded his jurisdiction in the sense that he is trying to deny the benefit of amalgamation to the ITI Limited (old) by ignoring the consequence of amalgamation scheme sanctioned by the Hon'ble High Courts at Madras and Chandigarh and trying to tax the income of the ITI Limited (old) who ITA Nos. 80, 728 & 1377/Chny/2008, 498/Chd/2007 & 1809/Chny/2014 was the owner and seller of shares in the hands of the ITI Limited (new) which till the date of sale of share had nothing to do with such sale, only on the ground that in his opinion assets and liabilities as well as the business has passed on to the ITI Limited (new), the appellant, even though this hiving off of financial business of ITI Limited (old) to ITI Limited (new) as a going concern was also sanctioned by the High Court itself.

28. The ld. AO has made one more allegation that the business of ITI Limited (old) was sold as a going concern before the date of amalgamation to ITI Limited(new) and the amalgamation had no effect whatsoever on the old NBFC business carried on by the ITI Limited(new). We have gone through the reasons given by the AO and we do not ourselves in agreement with view taken by the AO, because, making RAJAM a subsidiary and hiving-off of finance business was part of the scheme of amalgamation. Further, there was a complete change in the entire ownership of NBFC ITA Nos. 80, 728 & 1377/Chny/2008, 498/Chd/2007 & 1809/Chny/2014 business. Earlier, i.e. before hiving-off, it was being owned and run by ITI Limited (old) and after hiving-off it was being owned and run by RAJAM, now renamed as ITI Limited (new). He has also conveniently forgotten that ITI Limited (old) carried on the NBFC business till the time it was hived off to RAJAM w.e.f. 1.9.2002. In the year under assessment, ITI Limited (old) owned and ran the NBFC business from 1.4.2002 till 31.8.2002. These Shares were transferred on 26.7.2002, which is well within the period in which the NBFC business was owned and ran by ITI Limited (Old). We fail to appreciate the logic by which this amount can be taxed in the hands of RAJAM later renamed as ITI Limited (new) who acquired the NBFC business w.e.f. 1.9.2002 when these Shares had already been sold by ITI Limited (old) on 26.7.2002 and ITI Limited (old) had also received almost ninety percent of payment. How RAJAM can be asked to pay taxes on a transaction ITA Nos. 80, 728 & 1377/Chny/2008, 498/Chd/2007 & 1809/Chny/2014 that had taken place even before their date of acquisition of business. As regards, remaining portion of Rs 17 crores of sale proceeds, received by Rajam now renamed as ITI Limited (New), we find that the total sale consideration was about Rs 114 crores. Out of this, about Rs 97 crores was received by ITI Limited (old) in July 2002. The balance amount of Rs 17 crores was also part of the sale consideration payable to ITI Limited (old), which was withheld in an Escrow account and was finally released in 2004. Even this amount of Rs 17 crores was duly included by ITI Limited (old) in their revised return of income for the year under appeal. This view has already been upheld by the CIT (Appeal) Chandigarh. Since, receivable from Escrow account is part of business transfer agreement, the said sum had been received by Rajam, now renamed as ITI Limited (New) along with interest. In any way said fact ITA Nos. 80, 728 & 1377/Chny/2008, 498/Chd/2007 & 1809/Chny/2014 does not alter the legal position of taxation of capital gain in the hands of ITI Limited (old).

30. The ld. AO has alleged that the slump sale or hiving-off of business was not genuine. Assuming, ITA Nos. 80, 728 & 1377/Chny/2008, 498/Chd/2007 & 1809/Chny/2014 though not admitting, Slump-sale was not genuine, then the logical course of action would be ignore the Slump-sale and revert to the original position as if no Slump sale had taken place. Even then the taxability of income from sale of Shares of Kothari Pioneer AMC limited remains in the hands of ITI Limited (old). Because, said Shares had been bought, held and sold by ITI Limited (old). Thus, even if the Slump-sale was not genuine, the income from sale of Kothari Pioneer Shares cannot be taxed in the hands of RAJAM, now renamed as ITI Limited (New). Further, it is a fact that RAJAM was not a subsidiary of ITI Limited (old) till 18.8.2002. The appellant or the ITI Limited (old) has nowhere claimed that RAJAM was a subsidiary of ITI Limited (old) prior to 18.8.2002. The return of income filed by RAJAM on 6.9.2002 was relating to the year ending on 31.3.2002. There was no legal requirement for RAJAM to refer to the agreement, which took place ITA Nos. 80, 728 & 1377/Chny/2008, 498/Chd/2007 & 1809/Chny/2014 about six months after the expiry of the relevant period for which the return was filed. The ld. assessing officer of RAJAM had all the opportunity to verify the veracity of the agreement during the course of assessment proceedings but he chose not to do so. As regards Mr. Simon Soloman, we fail to see the relevance of his being a Manager or a Director, in the context of slump- sale or hiving-off of business. Nevertheless, the factual position is that Mr. Solomon has been an employee Director of the appellant company and thus, this fact would not alter the position of law on taxation of capital gain.