JUDGMENT

A. K. GANGULY, J. — All these reference matters were heard together as common question is involved in respect of four assessment years and as such they are decided by the following judgment.

The common question which falls for a decision in all these cases is :-

“Whether in the facts and in the circumstances, and on a true construction and interpretation of the Gazette Notification dated 30th August, 1991, read with the clarification dated 17th March, 1993 issued by the Department of Company Affairs, Income Tax Appellate Tribunal was justified in coming to the conclusion that amalgamation of OMC Alliance Limited, the erstwhile subsidi¬ary company with Orissa Mining Corporation Limited became effec¬tive from 30th August, 1991 and not from 1st April, 1986 and consequent denying the claim of OMC for treating all the opera¬tion of the erstwhile subsidiary as that of the Parent Company, namely, OMC from 1st April, 1986 and resultant loss”.

2. It is only the above question which has been referred to this Court by the Tribunal. The material facts of the case appear from the referring order of the Tribunal and which are as follows;

3. The Orissa Mining Corporation (hereinafter called the Corporation), a Government of Orissa undertaking, the assessee and the applicant before the Income Tax Appellate Tribunal (ITAT), is engaged in the mining of different kinds of Ores. The Corporation had a wholly owned subsidiary named OMC Alloys Limit¬ed. By a Gazette Notification dated 30th August, 1991, issued by the Government of India, Ministry of Law, Justice and Company Affairs, the subsidiary company was merged with the Corporation in public interest as contemplated under Section 396 of the Companies Act.

4. Clause 4(2) of the said Notification stipulates as follows;

“4. Amalgamation of the companies.

(1) xxx xxx xxx

(2) For accounting purposes, the amalgamation shall be effected with reference to the audited accounts and balance sheets as on 1st April, 1986 of the two companies and the transactions thereafter shall be pooled into a common account, the dissolved company shall not be required to prepare its final accounts as on any later date and the resulting company shall take over all assets and liabilities according to the balance sheet as on 1st April, 1986 and accepts full responsibility for all transaction thereafter.”

5. It appears that subsequently the Government of India, Ministry of Law and Justice Affairs issued another Gazette Noti¬fication dated 17.3.1993 by way of law clarification. The clari¬fication is to effect that “the effective date for all intents and purposes in regard to the amalgamation in question shall by 1st April, 1986”. The said clarification is in respect of the Gazette Notification dated 30th August, 1991.

6. Therefore, the main issue is the effective date of merger/amalgamation.According to the Corporation - the assessee, the amalgamation took place with effect from 1.4.1986. But the contention of the Revenue is that the merger took effect from the date of Notification i.e. with effect from 30th August, 1991 and the revenue contended that the subsidiary company, OMC Alloys existed as a separate entity from 1.4.1986 to 29.8.1991. There¬fore, all the transactions including profits and losses arising from the business carried on by the subsidiary company cannot be treated as the business of the Corporation.

7. The stand of the Revenue was contested by the Corporation, but the Tribunal did not accept the contention of the Corporation and upheld the stand of the Revenue that the merger took place only from 30.8.1991 and not from 1.4.1986.

8. From out of these facts, the aforesaid question has been referred to this Hon’ble Court for its answer.

9. It may be mentioned hereinbelow that in this case the assessee, the Corporation, is the transferee company and its subsidiary OMC Alloys Limited is a transferor. The learned coun¬sel for the Corporation urged that in the order of amalgamation dated 30.8.1991 “ap