Corporate Law Daily
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Today’s newsletter analytically summarizes the top Corporate Law stories reported at?taxmann.com .
In the instant case, a petition was lied under sections 230-232 of the Companies Act, 2013, seeking sanction of the Composite Scheme of Arrangement amongst 'Reliance Jio Infocomm Limited' and 'Jio Digitial Fibre Private Limited' and 'Reliance Jio Infratel Private Limited' and their respective shareholders and creditors.
Consequently, the NCLT issued notices to Regional Director, concerned income-tax authority, Securities and Exchange Board of India, Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd., for the representations, if any.
The Joint Income Tax Commissioner and the Income Tax Officer filed an appeal with the NCLAT, contending that by way of arrangement, the transferor company had sought to convert the redeemable preference shares into loans i.e. conversion of equity into debt which was not only contrary to the Companies Act, 2013 but also would reduce the profitability or the net total income of the transferor company causing a huge loss of revenue to the income-tax department.
The NCLAT held that without providing any evidence it is not possible for the Income-tax department to determine that the scheme of arrangement gives undue favor to shareholders and results in tax avoidance. The approval of the scheme by the NCLT should not be interfered with.
Subsequently, the IT department preferred an appeal with the apex court. Joint Commissioner of Income-tax submitted that impugned orders and/or sanctions of the Scheme might come in way of the Department while framing assessment and to that extent, the interest of revenue would be affected.
The Apex Court held that impugned judgment and orders passed by NCLAT as well as NCLT approving scheme was not to be interfered with. Further, NCLT as well as NCLAT had already clarified that the IT department would be entitled to take out appropriate proceedings for recovery of any tax statutorily due from the transferor or transferee company or any other person who was liable for payment of such tax due.
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Earlier, RBI advised the participants in the Government Securities (G-Sec) market about the “Price/Yield range setting” facility provided on the e-Kuber platform as a risk management measure. This helps to define a range i.e., a max. and a min. value for bids in an auction. This was expected to eliminate instances of Fat-finger/Big-figure error by the bidders.
Now, in order to eliminate instances of Fat-finger/Big-figure error by the bidders in the G-Sec auctions, the RBI has advised all market participants to utilize the “Price/Yield range setting” facility provided on the e-Kuber platform before placing bids in the Primary Market auctions. Also, It may be noted that no request for cancellation of bids will be entertained after the close of auction window.
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