M/s. Optum Global Solutions lndia Private Limited v. circumstances of the case. (d) Award the costs of this

M/s. Optum Global Solutions lndia Private Limited, Sth 6th and 7th floor, Offic.-level Building No. 14, Sundew Properties, SEZ.(tVlindspace)'-APllC Layout, Survey Noi. 64, Hi-Tech -City, tt/adhapg1, Hyderabad 500081, feirngbnu Through its Authorized Sigriatory, N/lr. Prateek Gqqta S/o Shri nrvin<i'Gupta, Oc6. Associate Directorl Taxation, aged about 42 years, Rl/o Gurugram AND

1. Principal Cornmissioner of lncome Tax, Circle4, A-Block, 2nd Floor, I T Towei, AC Guards, fVlasab Tank. Hyderabad, Telangana, 500004

2. Assistant rlommissioner of lncome Tax, Circle 5(1), Hyderabad, B-Block, 2nd Floor, I T Tower, AC Guards, fMasab Tank, Hyderabad, Telangana, 500004 ...PETITIONER ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to(a) To lssue a Writ of mandamus, or a Writ in the nature of mandamus quashing the impugned Notice dated 14.10.2024. (c) lssue a Writ of mandamus, or a Writ in the nature of mandamus declaring that the Petitioner is entitled to the MAT credit of the amalgamating entity. (e) For such further and other reliefs, including costs of this Petition, as this Honble Court may deem fit and proper in the nature and circumstances of the case. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant stay of operation of the lmpugned Notice dated 14.10.2024 as well as consequent proceedings/actions Counsel for the Petitioner: SRI KAMAL SAWHNEY REPRESENTING FOR SRl. MAMILLA ASHWIN REDDY Counsel for the Respondents: SRI K. SUDHAKAR REDDY (Sr. SC FOR INCOME rAx) The Court made the following: COMMON ORDER THE N' SRI CE AM AND THE H BLE STT NARS G RAO I{AND OND WRTT PETITION Nos.32633 and 32578 of2024 COMMON ORDER 2 her rhe lton'bte Sri Justice t'sam Kosh;') Heard Mr. Karnal Sar,r'hney, learned counsel, representing Mr' Mamilta Ashwin Reddy, learned counsel for [he petitioner, and Mr. K' Sudhakar Reddy' learned Standilg Counsel for the lncome Tax Departtnent ftrr the respondents'

2. These are two matters dealing with the same issue in respect of the sanle petitioner / assessee, except for the assessment years' Since the grounds of chatlenge of the impugned orders being same, we proceed to decide the two u'rit petitiols by this common order. Writ Petitiop No.32633 of 2024 is ir"r respect of tlre assessment year 2018-19 and writ Petition No.32578 o{ 2024 is in tespect of the assessment Year 2017-18. For convenience, the facts in Writ Petition No'32578 of 2024 at€

3. discussed hereunder.

4. The instant writ petition has been filed by the petitioner seeking for issuance of a writ of mandamus for quashment of the impugned notice dated

14.10.2024, issued by respondent No.l. It was also sought for by the petitioner \ Page2ofll for issuance of a writ of mandamus declaring that the petitioner is entitled for Minimum Alternate Tax (MAT) Credit of the amalgamtrted entity

5. The facts of the case are that the petitioner is a cornpany incorporated under the Companies Act and is engaged in the husiness of infbrmation technology and information technology enabled services- 'fhe tnatter involved in the present c:rse is the r-rotice issued by respondent No.l, dated 14.10.2024, under Section 263 of the [ncome Tax Act, 1961 (brieflv,'the Act'hereinatter) for the assessmentyear 2017-18. The petitioner enjovs an interim protection of this Court granted on22.11.2024 till date. The notice under challenge is one seeking for explanation from the petitioner as to why the MAT Credit amounting to Rs;.21 ,28,50,6701- pertaining to another entity namely M/s. United Health Group Information Services Pvt. Ltd., which is the arnalgarnating entity, be not disallowed and the same amount be recovered rvith interest tl'om the petrtroner.

6. It is pertinent to mention that the aforesaid MAl' Credit was allowed to the petitioner by way of a rectification order dated 03.09.2022, which was passed after due verification. It is this rectified order which is now sought to be revised and for rvhich the impugned notice has been issued I I +: II :h Page3ofll

7. Learned counsel for the petitioner has challenged the impugned notice primarily on the following two grounds:- I T'hat the impugned notice is without any jurisdiction, as the very basis of the impugned notice i.e. the rectification order dated

03.09.2022 has becol11e non-est in vierv of the newly inserted provision under Section gzCD (3) of the Act as a result of the Advance Pricing Agreement (APA) dated 28.03.2023;and

2. That the impugned notice even otherwise is ip contravention of the settled legal position so far as an amalgamated company being entitled to MAT Credit pertaining to the transferee company after the amalgamation having been taken place' g. It was the contention of the learned counsel for the petitioner that in terms of the provisions of Section 92CD (3) of the Act, if the assessee has entered into an Advance Pricing Agreetnent with the Central Board of Direct Taxes after an assessment proceedings has been completed, the requirement of law is that the Assessing Officer is required to pass a fresh assessment order in accordance with the Advance Pricing Agreement' g. According to the learned counsel for the petitioner, the original assessment order was passed on 26.03.2022, the rectification order was passed \ \ I l : i J ; i Page4ofll on 03.09.2022 and the Advance Pricing Agreement was entered upon on

28.03.2023. Thus, in view of the said developments, the Assessing Officer is required to pass a fiesh assessment order computing the total incorne in the light of the Advance Pricing Agreement.

10. It was al:so contended by the learned counsel for the petitioner that pursuant to the Advance Pricing Agreement, dated 28.03.2022, the petitioner had filed rnodified return on 16.06.2023. According to him, since they have frled the rnodified return in terms of the Advance Pricing Agreernent, the original assessrnent order dated 26.03.2022 and the rectification order dated

03.09.2022 stands completely sub-planted and the Assessing Officer is required to pass a fi'esh assessment order in terms of the Advance l'}ricing Agreement as well as the rnodified return. I l. l.earned Standing Counsel for the Income Tax Departrnent, however, opposed the writ petition and contended that since the petitioner had wrongly availed the MAT Credit, the authorities have decided to revise the said order and it was for this reason the impugned notice was issued. According to the leamed Standing Counsel for the Income Tax Department. there is an apparent etror in the rect.ification order granting MAT Credit so far as the transferee entity M/s. United Health Group Information Services Pvt. [,td., there was a ,,7 } Page5ofll case of loss of revenue, and because it was a case of loss of revenue, the order granting MAT Credit firstly is emoneous and secondly is prejudicial to the interest of the Revenue. Hence, the impugned notice under Section 263 of the Act issued by respondent No.1 cannot be found lault with. t2. It was also the contention of the learned Standing Counsel for the Income Tax Depaftment that it is only a case of noticc rvhich has been issued. The petitioner can still submit his response and based on his response, appropriate order shatt be passed by the Revisional Authority i.e. respondent No' l '

13. Lastly, it was contended by the leamed Standing Counsel for the lncome Tax Department that the authorities had issued the show-cause notice on the basis of an audit report and the objections raised in the audit reporl in respect of granting of MAT Credit to the petitioner. On this count also the impugned notice does not warrant interference and thus prayed for dismissal of the writ petition.

14. From the factual matrix narrated in the preceding paragraphs, admittedly the petitioner is a transferee entity from amalgamation proceedings, wherein I\zus. united Health Group Information Services Pvt. Ltd. got amalgamated with the petitioner company. The original assessment order for the assesslnent year Z0l7-18 was passed on26.03.2022, which further stood rectified on 03 .09-2A22' / /t / _4 I Page6ofll r) Subsequently, under Section 92CD (3) of the Act, a bilateral Advance Pricing Agreement was entered on 28.03.2A8 and, based on the said Advance Pricing Agreement, a revised return was filed on 16.06.2023.

15. [t would be relevant at this juncture to take note of the provisions of Section 92CD (3) of the Act, which for ready ref'erence is reproduced hereunder: "Effect to ctdvance pricing agreement. 92CD. ( l1 *otwithstancling unything to the conlrary utnluinecl in scc:tion 139, v,ht:re un.t,pcrson has entered into anagreement arul prior tct the dote o.f'entertng into the agreement, any return of income hu.s been .t'itrnishetl ttncler the provisions of section l39for any assessment ),ear relevant to a previous year to u,hich such agreement applies, such per.\on .rhall./urni.sh. within a period of three months .from the end of the mctnth in vvhich the .tuid agrr:enxent y,as entered inlo, a modified relurn in accordance u'ilh und limited lo the agreement. {'2) Save as rtlhenuise provided in this section, all other prot,isions o-f this Act shall uppty accordingly as if the modified return is'a return-furnishctl under section 139. (3) U tht: a,sse:;sment or reossessment proceedings for an assessment yeor relevant to u previous year to vthich the agreement applies have heen completed be.fore the expiry of period allowed for .fitrnishing o.f ntot{ifietl relurn unc{er sub-,section (l), the Assessing Officer shall. in a cuse u,here modified return is filed in accordance with the provisions of sub-section (l), pass an order modifying the total income of the relevant assessment ),ear determined in such assessment or reassessment, us ihe ca.se may he, huving regurcl to and in accordance with the agreement. " \ t ,/1 PageTofll

16. A plain reading of the aforesaid statutory provision clearly gives an indication ol the fact that once a modified return as per the Advance Pricing Agreement is filed, the said modified return has to be treated as the return filed under Section 139 of the Act. Sub-Section (3) of Section 92CD also provides fbr the steps to be taken by the Assessing Officer in the event of a modified return having been filed. The reading of the aforesaid provision of law also gives a clear indication of the fact that once the modif-red return is filed, the earlier return filed, the earlier assessment order passed if any, will not be of much relevance any further and it would lose its efficacy for all practical purposes and a fresh assessment order is what is required to be passed and the Assessing Officer would be at liberty to scrutinize the rnodified return submitted and pass appropriate orders, which thereafter would be, either appealable or revisable.

17. Whether the amalgamation proceedings and the order passed thereon r.r,ould have a binding effect or not, stands already settled, and the fact that it has binding effect has been recently dealt with by the Madras High Court in the case l PageSofll {, of Ponni Sugars (Erode) Ltd. vs. Assistant Commissioner of Income-taxr wherein in para6lraph Nos.l2, 15, 17 and 18, it has been ireid as under i ! :1 ,i i1 I I : i I " 12. 'l-hc cttra issne invrtlvad in the present writ petitiol.t l.r ns lrt v'hethar tha statcmtnt Ltnder Sec'tion 393 of the Companies Ait, 1956 v'ttttld.fbrnt ct part o.f the Sc:hente oj ilrrangement and if so, whether the proceedings .fbr .sanctioning ol' tha Schente ttnder Sections 391 to -'i91 v'ould be a proceeding in rem?

15. The Cult:utta tligh Court in Maan concast Pvl. Lld. & anr. Vs LV'ast []angul lndu.s'tt'iul Devclopntent Corporcttion Ltd. & Ors. lleported in (201i1 ti()(; Online Cal 19426 also took a similar view' in thc.follov'ing iltannet';- ";| trans.f'at' v'hich takes place by opercttton oJ !uv'. thercfore, need rutt mect the requirement of the provisions o.f the Transfer of l'ropert.y Act, 1882 or the Indian Registration Act, 1908. ./.1(. (Llombay.) Private Ltd. (supra) has held thar, a scheme undcr ,\ections 391 and 392 of the Companies Act, 1956 fi'umcd b7, the Court tn respect of a company. tct pay qf its cre(litors. v,ould be binding upon the creditor'.s and the shtrcfutlcler.s o.l'such company. It ha,s held thal. ct schcme sct'ttlioncd h), the Court does not operate as a mere agreernent betv'een the parties. It becomes binding on the company, c r eLl it o t's ancl the s hareholde rs and has s tatutorl' .for ce. " ",1 sclrcnte tl'arnalgamation or arrangement documents lhe compromise arrived at between the parties to the scheme in[er t t,it,os. A scheme may be belween two or more companies.{l '1zozo1 16 rrR-oL s46 ?-'\:, Page9ofll may also be between a company and its shareholders or creditors. A proceeding for sanction oJ'a scheme relating lo a company under the Companies Act, 1956 is a proceeding in ram.

17. ln Dalmia Power Ltd. Vs Assislant Comrnissioner of'Income'l-nx. Circle-1, Trichy reported in (2019) 418 ITR 221 (\v[ad), the Hon'ble Suprerne Court had referred to one oJ'its own decisions und held lhut .such Schemes sanctioned under the Compcrnies Act htts a sttttutory .forcc und the order is a judgment in rem. The relevant portton of the ohservolion reads us hereunder:-

4.6 Pursuant thereto, the Schemes v,ere sanctioned hy the (:L7', Chennai vide Ordcrs I 6. I 0. 20 I 7, 20. I 0. 20 I 7, ^ 26.10.2017, 28.12.2017, 10.01.2018, 20.04.20t8 ancl 0i.05.2018; and, vide Orders dated 18.05.2017 emd

30.08.2017 by the NCLT, Guwahati. Accordingly, the Schemes attaines statutory force J.K. (Bom.) (P.) Ltd. v. Nev' Kaiser- IIIind Spg. & Wvg. Co. Lrd. [1970J 40 Comp. Cas. 689 not only inter se the Transferor and Trans-feree Companies. but also in rem, since there was no objection raised either by the statutory authorities, the Department, or other reg,ulutors or authorities, ltkely to be affected by the Schemes.

18. On a comprehensive enunteration of the aJbresaid iudicial precetlents, it can he summarised and held that the order sancttoning a Scheme of Arrangement pursuant to Sections 391 to 394 of the Companies Act will have a statutory force, binding on all concerned and the sanctittn o/ the Cottrl would operate as a judgment in rem. "

18. The fact that the scheme of amalgamation having a binding ef- ct and upon reading the provisions of Section 92CD, we are of the considered opinion that the impugned notice dated 14.10.2024, at this juncture was un-called for. '1 .:iiii Page l0 of I I

19. It is also rlecessary to visualize at this juncture that if the impugned show- cause notice is permitted to be proceeded and the rectified order dated

03.09.2022 is ltrund to be en'oneous, it rvould not be o1-much consequence for the reason ol'the subsequent developrnents that have tianspired i.e. the Advance Pricing Agreernent l-reing entered orl 28.03.2023 and the modified retum subrnitted on 16.06.2023.If we permit the show-cause notice to continue, as of no\ /, then the Aclvance Pricing Agreement and the subsequent submission of moditled rcturn u'ould becorne inconsequential. On the other hand, now that the Advance Pricin.q Agreernent has been entered into and the modified return having been submitted, nothing prevents the Assessing Officer from re- scrutinizing the modified return treating it to be the returrr filed under Section 139 of the Act ernd pass appropriate fresh assessment order which may also be inclusive of the r.:ontents of the show-cause notice which is now under challenge in the instant wnt petition.

20. For the given fbcts and circumstances of the case, we are of the considered opiniorr that the irnpugned show-cause notice is not sustainable and the same deserves to be and is accordingly set aside / quashed. The instant Writ Petition accordingly stands allowed. Consequently, Writ Petition No.32633 of 2024 also stands allowed. I Pagellofll

21. As a sequel, miscellaneous petitions pending if any, shall stand closed. Horvever, there shall be no order as to costs /TRUE COPY/ SD/-MOHD. ISMAIL DEPUTY REGISTRAR @ SECTION OFFICER To, Towei, nc cuJ'ii;,"G;b Tink, uvoerabad' TG', 500004

1. Principal Commissioner of lncome Tax' Circle 4' A:Block' 2nd Floor' I T 2. Assistant Commissioner of lncome Tax, Circle 5(1), Hvderabad, B-Block, 2nd Floor, lT Tower, Ac Guardt, rvr"tZuit"Il'iivotitjo"l' TG' 500004

3.oneCCtoSRl.IVlAIulLLAASHWINREDDYAdvocate[oPUC] 4. one cc to sRl K. SUDHAKAR REDDY (Sr' sc FoR lNCOtvlE TAX) IOPUC] 5. Two CD CoPies KKS GJP g- HIGH COURT DATED:19/06/2025 e I 'i H[ .g,rr'i o t" }, i: t ? 0 ll0tt Pp * .SFA TCHEI) * COMMON ORDER WP.No.32633 of 2024 AND 32578 OF 2024 ALLOWING THE WRIT PETTTION WITHOUT COSTS L\