ivil Appeals Nos
1334 and 1335 of 1982
From the Judgment and Order dated 9111979 and 85 1979 of Delhi High Court in LPA No 192 of 1979 and RFA No 245 of 1969
Sasidharan and PK Pillai for the Appellants
Tapas Ray AK Srivastava and Ms A Subhashini for the Respondents
The following Order of the Court was delivered KANIA J Lands comprising a few bighas belonging to the claimants appellants and situated in the area now known as Nehru Place  in Delhi were notified for acquisition by the Government of India by a Notification dated November 13 1959 issued under Section 4 of the Land Acquisition Act 1894
The said lands were duly acquired under the said Act
In compensation proceedings the Land Acquisition Collector awarded to the claimants appellants compensation at the rate of Rs2000 per bigha and further awarded solatium and interest as provided by law
In two references under section 18 of the Land Acquisition Act at the instance of the appel lants the Additional District Judge enhanced the compensa tion from Rs2000 per bigha to Rs40005000 per bigha
From the orders of the Additional District Judge
the appel lants filed appeals in Delhi High Court
The Delhi High Court enhanced the compensation to Rs7000 per bigha and also awarded solatium and interest
Compensation was deter mined at the aforesaid rate largely on the footing of a sale of comparable land by 128 one Puran to the Delhi Finance Company Private Limited hereinafter referred to as the DLF Co 
That sale took place a few months prior to the date of the Notification and rate at which the land was sold was Rs6000 per bigha
In view of the period of few months which had gone by and the rise in land values the High Court determined the compensa tion at Rs7000 per bigha
The claimants strongly relied on the instances of sales of small developed plots by the DLF Co and pointed out that it was on the basis of the sales that the High Court had awarded compensation at the rate of Rs11 per sq yard to the DLF Co in respect of similar lands of the said company acquired by the government
This amount was arrived at by taking the price of developed plots sold by DLF Co and deducting therefrom the cost of develop ment
It was alleged by the claimants that this land was contiguous to the land of the claimants acquired as afore said and the acquisition was at almost the same time as in the case of the claimants
It was submitted by them that the principal reason given by learned District Judge as well as the High Court for not accepting the instance of the compen sation awarded to DLF Co was not tenable in law
It was submitted by them that compensation should also have been awarded to them on the basis of the said instance
The High Court has taken the view that the instance of compensation awarded to DLF Co was not acceptable mainly because that company was in a position to develop the land and to realise its potentiality and had been able to sell certain developed plots at a very much higher rates
The High Court took the view that the higher compensation was liable to be awarded to the DLF Co because that organisation was in a better position to develop the land and hence
the potentiality of the land in its hands was greater
With respect to learned Judges of the High Court who delivered the impugned judgment in our opinion the view taken by them cannot be sustained
In land acquisition proceedings compensation has to be fixed on the basis of a hypothetical sale at or about the time of the notification under section 4 of the Land Acquisition Act of similar land by a willing seller to a willing buyer
there being no other factors like urgent need of money or urgent need of the land for a special purpose and so on which might depress or augment the price
In determining this compensation the ability of a particular party or his lack of ability to develop the land and to realise its potential
cannot be regarded as a relevant circumstances
The High Court
there fore was in error in placing great reliance of the afore said circumstances in determining the value of the land for fixing the compensation
129 We would have proceeded to determine the compensation ourselves but for the fact that the appellants have failed to furnish any material on record of this Court on which we can fix the proper compensation nor have any arguments been advanced before us in that regard
In these circumstances we set aside the impugned judgments and orders and remand the appeals to the Delhi High Court for determination of the proper compensation for the lands acquired in accordance with law
The appeals are accordingly allowed
There will be no order as to costs
GN Appeals allowed


Summary:
Under the scheme of amalgamation and order of the High Court under Sections 391 and 394 of the on 2891962 one Indian Sugar Company was amalgamated with the appellant assessee company
The transferor company had been allowed expenditure to the extent of Rs58734
The appellant transferee company claimed exemption on the amount of Rs58735 from income tax for the assessment year of 1965 66 on the ground that the amalgamated transferee compa ny was not liable to pay tax under Section 411 of the Income tax Act as the expenditure had been allowed to the erstwhile transferor company
The claim was disallowed by the Income Tax Officer
The transferee appellant company s appeal was also rejected by the Appellate Assistant Commis sioner
The appellant company preferred appeal before the Income Tax Tribunal which was allowed on the ground that after amalgamation the transferor company s identity was lost and it was no longer in existence and the transferee company was a different entity
When the question was referred to the High Court it answered the reference in favour of the Revenue holding that on amalgamation of the two companies neither of them ceased to exist instead both the companies continued their entities in a blended form and the amalgamated company was a successor in interest of the amalgamating company
333 The Appellant Company s application under Section 291 of the Income Tax Act read with Section 109 Code of Civil Procedure was dismissed by the High Court
Hence the present appeal
Allowing the appeal of the assessee Appellant company this Court HELD 1
Section 411 has been enacted for charging tax on profits made by an assessee but it applies to the asses see to whom the trading liability may have been allowed in the previous year
If the assessee to whom the trading liability may have been allowed as a business expenditure in the previous year ceases to be in existence or if the asses see is changed on account of the death of the earlier asses sees the income received in the year subsequent to the previous year or the accounting year cannot be treated as income received by the assessee
146C E 2
In order to attract the provisions of Section 411 for enforcing the tax liability the identity of the asses see in the previous year and the subsequent year must be the same
If there is any change in the identity of the assessee there would be no tax liability under the provisions of Section 41
146E 3
Two companies may join to form a new company but there may be absorption or blending of one by the other both amount to amalgamation
When two companies are merged and are so joined as to form a third company or one is absorbed into the other or blended with another the amalga mating company loses its entity
147G 4
After the amalgamation of two companies the transfer or company ceased to have any entity and the amalgamated company acquired a new status and it was not possible to treat the two companies as partners or jointly liable in respect of their liabilities and assets
148E 5
The true effect and character of the amalgamation largely depends on the terms ofthe scheme of merger
But there can be no doubt that when two companies amalgamate and merge into one the transferor company loses its entity as it ceases to have its business
However their respective rights or liabilities are determined under the scheme of amalgamation but the corporate entity of the transferor company ceases to exist with effect from the date the amal gamation is made effective
148H 149A B 334 Commissioner of Income Tax Madhya Pradesh vs Hukumchand Mohanlal and Ms General Radio and Appliances Co Ltd  Ors
vs MA Khader dead by Lrs 1986 2 SCC 656 followed
Halsbury s Laws of England 4th Edition Vol
7 Para 1539 referred to