2012 (8) TMI 237 - HC - Income Tax

Application for rehabilitation scheme to BIFR - Department claimed that relief flowing from Section 72A should not be granted by the BIFR itself without considering by the department - Held that - A reading of the Section 32 shows that in case of amalgamation of a sick industrial company with another company, the provisions of Section 72A would apply in relation to such amalgamation, with the modification that the power of Central Govt. under that section may be exercised by the Board, without any recommendation by the specified authority referred to in that section - As the amendment in Section 32 had not been made by the Parliament the provision continues to dictate that the power of the Central Government under Section 72A shall be exercised by the Board without the recommendation of the specified authority even though under the amended Section 72A, no role is prescribed to the Central Government with or without the recommendation of the specified authority - thus it cannot be said that the BIFR fell into an error by directing the concession to be granted itself, rather than requiring the Income Tax Officer to examine this aspect of the concession - in favour of assessee.

Summary

Issues Involved:
1. Delay in filing the writ petition.
2. Applicability of Section 72A of the Income Tax Act.
3. Authority of BIFR to grant concessions under Section 72A.
4. Redundancy of Section 32(2) of the Sick Industrial Companies (Special Provisions) Act, 1985.
5. Interpretation of amendments to Section 72A of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Delay in filing the writ petition:
The writ petition was filed after an inordinate delay of almost 11 months from the order of the AAIFR. The petitioner did not provide a satisfactory explanation for this delay, citing routine reasons such as obtaining sanctions and permissions from various authorities and the normal lethargy of government departments. The court referred to the Supreme Court judgment in the Office of Chief Post Master General & Ors. v. Living Media Ltd. & Anr., which emphasized that government bodies must provide reasonable and acceptable explanations for delays, and procedural red-tape is not an adequate excuse. Consequently, the court found the petitioner's explanation unacceptable.

2. Applicability of Section 72A of the Income Tax Act:
Section 72A deals with the carry forward and set off of accumulated loss and unabsorbed depreciation allowance in cases of amalgamation. The court compared the provisions of Section 72A before and after its amendment on 01.04.2000. Before the amendment, a declaration by the Central Government was required based on the recommendation of a specified authority. Post-amendment, the requirement for such a declaration was removed, and the income tax officer was tasked with determining the applicability of Section 72A.

3. Authority of BIFR to grant concessions under Section 72A:
The court examined Section 32(2) of the Sick Industrial Companies (Special Provisions) Act, 1985, which allows the BIFR to exercise the powers of the Central Government under Section 72A without the recommendation of the specified authority. The court noted that the BIFR's authority to grant such concessions was upheld in the Supreme Court case of Indian Shaving Products Limited Vs. Board of Industrial and Financial Reconstruction and Another. The court concluded that the BIFR was justified in directing the incorporation of a clause in the rehabilitation scheme to grant the benefit of Section 72A from the date of the sanction of the scheme.

4. Redundancy of Section 32(2) of the Sick Industrial Companies (Special Provisions) Act, 1985:
The petitioner argued that Section 32(2) had become redundant after the amendment to Section 72A. The court rejected this argument, stating that Parliament had not amended Section 32(2) despite being aware of the changes to Section 72A. The court emphasized that it could not presume Parliament's ignorance and that the provision must be given meaning as long as it remains in the statute book.

5. Interpretation of amendments to Section 72A of the Income Tax Act:
The court analyzed the impact of the amendments to Section 72A, noting that the requirement for a Central Government declaration was removed, but this did not affect the BIFR's power under Section 32(2) of the Sick Industrial Companies (Special Provisions) Act. The court concluded that the BIFR could still grant the concessions directly without needing the income tax department to consider the applicability of Section 72A.

Conclusion:
The court dismissed the writ petition, upholding the BIFR's authority to grant concessions under Section 72A and rejecting the petitioner's arguments regarding the redundancy of Section 32(2) and the delay in filing the petition. The court found that the BIFR's actions were consistent with the statutory framework and relevant judicial precedents.