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1. In both these special civil applications the respective petitioner-company challenges the notice of acquisition respectively issued to it by the first-respondent, the competent authority, under the provisions of Chap. XX-A of the I.T. Act, 1961. The notices initiating acquisition proceedings under Section 269D(2) of the Act have been issued in respect of a transfer. The petitioner in Special Civil Application No. 1394 of 1973 is the transferor and the petitioner in Special Civil Application No. 1481 of 1973 is the transferee in respect of the transaction which was by means of a conveyance of sale dated March 30, 1973. Since both these special civil applications arise from the same bundle of facts and raise the same questions of law, it will be convenient to dispose of both of them by this common judgment. The transferor company is, what is known in the language of company law, a holding company and the transferee company is its wholly-owned subsidiary. There is no dispute on this aspect of the case. The transferor company was incorporated on May 28, 1958, and its object was, inter alia, to manufacture chemicals, drugs, etc. In the month of March, 1971, the transferor company acquired all the shares of the transferee company. The objects of the transferee company were, inter alia, to manufacture radios, television sets, etc. The transferor company appointed six nominees of its own to acquire one share each of the transferee company and the balance of the shares of the transferee company were acquired by the transferor company and thus the transferee company was from March, 1971, onwards, the wholly-owned subsidiary of the transferor company. In the month of December, 1971, a decision was taken by the transferor company with the object of restructuring and reorganising the transferee company and another wholly-owned subsidiary company. Under this decision, the scheme of amalgamation and reorganisation was to be effective from April 1, 1971. In the month of January, 1972, this scheme of reorganisation and restructuring which involved amalgamation was approved by the boards of directors and subsequently by the shareholders of all the three companies and the usual procedure of approaching the High Court concerned for approval of the scheme was to be followed. The Commission set up under the Monopolies and Restrictive Trade Practices Act (hereafter referred to as " M.R.T.P. Commission ") was asked to go into the scheme of the proposed amalgamation and the case was referred to the M.R.T.P. Commission by the Govt. of India. The report of the M.R.T.P. Commission made to the Government was forwarded to the companies concerned by the Govt. of India and the report of the Commission was against the proposed amalgamation and restructuring of the three companies.

2. Finding themselves unable to achieve the object of reorganising and restructuring by the process of amalgamation, it appears that the transferor company and the transferee company decided that the whole of the undertaking together with the business and all other assets pertaining thereto of the transferor company should be purchased and taken over by its wholly-owned subsidiary company and that the sale should be with effect from April 1, 1972. An agreement of sale in this connection was entered into between the transferor company and the transferee company on March 28, 1973, and a conveyance of sale was executed on March 30, 1973, and what was transfered was the industrial undertaking and the business of the transferor company and it was done as a going concern together with goodwill and all other assets thereof. The document of conveyance of sale was duly registered with the Sub-Registrar of Assurances and on June 8, 1973, the Valuation Officer functioning under the scheme of Chap. XX-A of the I.T. Act raised certain queries and asked for information from the transfsror and the transferee. It appears that some correspondence took place and, in the course of that correspondence, the company tried to satisfy the Valuation Officer that the transferor company had sold all the assets of its business together with goodwill and other intangible rights as a going concern at a slump price and that the valuation which was mentioned, namely, Rs. 3,00,03,350, was at the book value so far as lands and buildings were concerned and also so far as plant, machinery and other current assets as reduced by the liabilities were concerned and also so far as investments were concerned. The goodwill which formed part of this aggregate amount of rupees three crores odd was valued by the auditors of the company, M/s. Sorab S. Engineer & Co., at Rs. 1,10,00,000 and thus in the course of the correspondence with the Valuation Officer and also with the competent authority before the notices came to be issued and even thereafter, the stand of the transferor company and the transferee company has been that the provisions of Chap. XX-A could not be invoked so far as this transfer was concerned. Before the notices which are challenged came to be issued on September 17, 1973, an interview took place with the competent authority and in the course of that interview also, an attempt had been made to convince the competent authority that the transferee company was the wholly-owned subsidiary company of the transferor company. What transpired at that interview is reproduced in the letter dated September 7, 1973, part of annex. ' D ' to the petition in Special Civil Application No. 1394 of 1973. Ultimately, on September 17, 1973, notices were issued by the competent authority under Section 269D(1) of the I.T. Act and both the notices, namely, the notice to the transferor company as well as the notice to the transferee company, proceeded on the footing that the apparent consideration which was mentioned in the conveyance of sale, rupees three crores odd, was less than the fair market value of the properties and that the competent authority had reason to believe that the fair market value of the properties as aforesaid exceeded the apparent consideration therefor by more than fifteen per cent. of such apparent consideration and that the consideration for such transfer as agreed to between the transferor and the transferee had not been truly stated in the said instrument of transfer with the object of facilitating the reduction or evasion of the liability of the transferor to pay tax under the I.T. Act, 1961, in respect of any income arising from the transfer. It was also stated that the reason for initiating the proceedings for the acquisition of the aforesaid properties in terms of the Act had been recorded by the competent authority and, therefore, in pursuance of Section 269D, the competent authority was initiating the proceedings for the acquisition of the properties by the issue of the notice under Section 269D(1) of the Act to the transferor company and the transferee company and the schedule to the notice mentioned that the immovable property in respect of which these notices were issued was " all piece and parcel of land or ground and buildings and structures thereon, bearing Nos. 108/B1, 111/B and 112/B1 along with plant, machinery, current assets, investments and goodwill as per document registered at No. 1220/30-3-1973 (12 acres and 34 gunthas)".

8. In the light of the above provisions of law and the facts which are not in dispute at the present stage before us as set out hereinabove, the learned Advocate-General on behalf of the respective petitioner in each of these two special civil applications urged the following submissions before us :

(1) Chapter XX-A is not attracted in the case of this particular transfer from the holding company to its wholly-owned subsidiary company at book value because the conditions enumerated in Section 269C(1)(a) have not been satisfied. His further submission in this connection is that the consideration agreed to and paid has been truly stated in the deed of transfer.
" When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of Clause (iv), or, as the case may be, of Clause (v) of Section 47, are satisfied, the written down value of the transferred capital asset to the transferee company shall be taken to be the same as it would have been if the transferor company had continued to hold the capital asset for the purposes of its business."

19. In the instant case, as we have indicated above, Clause (iv) of Section 47 applies to the transferor company and the transferee company and the conditions of Section 47, Clause (iv), are satisfied and, hence, in the light of Expln. 6 to Section 43(1) and Expln. 2 to Section 43(6), the actual cost of the transferred capital asset to the transferee company must be deemed to be the actual cost of the transferor company as it stood immediately prior to the transfer of the capital asset and in the same manner, the written down value of the capital asset in the hands of the transferor company must be deemed to be the same as it was before the transfer took place. Thus, the law enjoins on all concerned to treat the actual cost of the parent Company as the capital asset of the transferee company when the transferee is the wholly owned subsidiary company and the same applies to the written down value as well. Under these circumstances, it is obvious that if the sale is effected at the written down value the capital asset is required by law to be valued so far as the actual cost and the written down value are concerned at what they were in the hands of the transferor, the parent company, and are treated as if the capital asset continued to be the property, of the transferor, the parent company.