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2012 (11) TMI 543 - AT - Income Tax


Issues:
- Allowance of set off of loss of amalgamating company against profits of appellant amalgamated company
- Justification of amalgamation for optimum utilization and expansion of business operations
- Disallowance of set off by Assessing Officer as a colorable device to avoid taxes
- Validity of the claim for set off under section 72A of the Act
- Questioning of scheme of amalgamation by Assessing Officer
- Applicability of Supreme Court decision on amalgamation date

Analysis:

The case involved an appeal by the revenue against the order of the CIT(Appeals)-I, Bangalore regarding the allowance of set off of the loss of an amalgamating company against the profits of the appellant amalgamated company for the assessment year 2008-09. The amalgamation was proposed between the two companies to achieve optimal utilization of resources and expansion of business operations.

The Assessing Officer disallowed the set off, alleging it was a colorable device to avoid taxes, questioning the validity of the amalgamation scheme, and the appointed date for amalgamation. The AO raised concerns about the amalgamation process and the timing of decisions related to it.

The CIT(Appeals) upheld the claim for set off, citing the provisions of section 72A of the Act and highlighting the timeline and steps taken for amalgamation. The CIT(Appeals) emphasized that the scheme of amalgamation was duly sanctioned by the High Court and took effect from the appointed date as per the scheme.

The Tribunal considered the Supreme Court decision on amalgamation dates and held that the amalgamation took effect from the appointed date specified in the scheme sanctioned by the High Court. The Tribunal found that the AO's doubts regarding the scheme being a tax avoidance device were baseless and upheld the CIT(Appeals) order, dismissing the revenue's appeal. The Tribunal concluded that the claim for set off was valid under section 72A, and the objections raised by the revenue lacked merit.

 

 

 

 

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