Yashwant Varma, J. - (1.) Heard Shri Piyush Agrawal, learned counsel for the revisionist and Shri A.C. Tripathi, learned standing counsel.
(2.) Both these revisions are with the consent of parties taken up for disposal together since they raise common questions of law. The two issues, which have been canvassed for consideration, relate to the taxability under Section 3-F of the U.P. Trade Tax 1948 on an agreement transferring a right to use certain machinery items. The second issue which arises is a levy of tax on the sale of molasses effected by the revisionist in the assessment year in question. The issue itself arises in the following backdrop of facts.
(3.) On 10 August 1993, the revisionist executed a lease agreement in favour of M/s. Gangeshwar Ltd with respect to machinery and equipment described in Schedule-'A' thereof. The lease agreement gave M/s. Gangeshwar Ltd a right to use machinery owned by the revisionist. The terms of this agreement are stated to have been extended during the assessment year in question. Both the corporate entities thereafter appear to have entered into an arrangement to merge. The revisionist was the Transferor Company while M/s. Gangeshwar Ltd was the Transferee Company. The Scheme of Arrangement was sanctioned by an order of the Court dated 6 March 2000. The "appointed date" under the scheme was stipulated to be 1 October 1997, while the "effective date" was to mean the date when a certified copy of the order passed by the High Court sanctioning the Scheme is filed with the Registrar of Companies. The relevant provisions of the Scheme read thus: "2.5 With effect from the Appointed Date, all debts, liabilities, duties and obligations of the Transferor Company (hereinafter referred to as "the said liabilities"), subject to the changes due to carrying on of the business by the Transferor Company upto the Effective Date in accordance with clause 2.1, shall, pursuant to the Order under Section 394 of the Companies Act, 1956 and without any further act or deed, also be transferred or deemed to be transferred to and vested in and assumed by the Transferee Company so as to be the debts, liabilities, duties and obligations of the Transferee Company and the same shall be paid and discharged by the Transferee Company on the same terms and conditions as agreed to by the Transferor Company and the creditors respectively. 2.6 With effect from the Appointed Date and up to and including the Effective Date: (a) The Transferor Company shall carry on and be deemed to have carried on all its businesses and activities and shall be deemed to have held and stand possessed of and shall hold and stand possessed of all the properties and assets referred to in Clause 2.4 hereinabove for and on account of and in trust for the benefit of the Transferee Company. (b) All the profits and incomes accruing or arising to the Transferor Company or expenditure and losses incurred or suffered as the case may be by the Transferor Company shall, for all purposes, be treated and be deemed to accrue as the profits, incomes or expenditures or losses, as the case may be, for and on account of and in trust for the benefit of the Transferee Company. (c) All taxes (including income-tax) paid or withheld in respect of or with reference to any profits or income from business and activities accruing to the Transferor Company shall be deemed to have been paid or withheld from the Transferor Company in its capacity as a trustee under Section 160 of the Income-tax Act,1961 for the benefit of the Transferee Company. (d) On the Scheme becoming effective, the Transferee Company would be entitled to revise its income tax returns as also the income tax returns filed by the Transferor Company so far as is necessitated on account of the Scheme becoming effective with effect from 1st October, 1997, being the Appointed Date under the Scheme, and such returns may be revised by the Transferee Company within one year of the Scheme becoming effective. 2.7 All properties and assets owned, held or acquired and investments made by the Transferor Company on or after the Appointed Date shall, subject to the other provisions of the Scheme, for all purposes, be deemed to have been owned, held or acquired/made by the Transferor Company as a trustee for the benefit of the Transferee Company, and accordingly, shall, without any further act or deed, stand transferred on the Effective Date from the Transferor Company to the Transferee Company without consideration as a transfer of property from a trustee to a beneficiary.";