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Petitioner challenges decision of Specified Authority on grounds of not considering relevant materials for amalgamation approval under s. 72A(1) of the I.T. Act. Petitioner seeks direction for declaration under s. 72A(1) from Union of India. Analysis: The case involves the petitioner, a public limited company, impugning the decision of the Specified Authority regarding the amalgamation of another company with the petitioner under s. 72A(1) of the Income Tax Act, 1961. The petitioner acquired controlling interest in the other company on July 1, 1978, and filed for amalgamation approval on August 8, 1979. The Specified Authority initially declined the recommendation but later indicated a reconsideration based on revised guidelines. The Central Government approved the proposed amalgamation on November 26, 1981, and the Orissa High Court sanctioned it on December 11, 1981. However, the Specified Authority later informed the petitioner that the amalgamation did not meet the conditions of s. 72A(1)(b) of the Act, leading to the current challenge. The history and purpose of s. 72A of the Act were discussed, emphasizing the provisions introduced to facilitate the amalgamation of sick industrial units with sound ones. The court noted that the Specified Authority's role is to recommend the fulfillment of pre-conditions under s. 72A(1)(a) and (b) to the Central Government, which holds the power to make final decisions. The court highlighted that the Central Government must independently assess relevant materials before issuing orders under s. 72A(1) and can override the Specified Authority's recommendation. The arguments presented by both parties focused on whether the proposed amalgamation met the public interest criteria outlined in s. 72A. The petitioner's counsel contended that the Specified Authority erred in considering irrelevant factors like industry diversification, while the standing counsel argued that the Authority's decision was justified given the industry's non-revival status. The court refrained from delving into the merits of these contentions, emphasizing the Central Government's responsibility to evaluate all relevant materials and make final determinations under s. 72A(1). In conclusion, the court directed the Union of India to pass final orders under s. 72A(1) after considering the Specified Authority's recommendation and other pertinent records within two months. The writ application was disposed of without costs, with both judges concurring on the decision. This judgment clarifies the roles of the Specified Authority and the Central Government in approving amalgamations under s. 72A of the Income Tax Act, underscoring the need for independent assessment of pre-conditions and relevant factors. The decision emphasizes the Central Government's discretion to make final determinations based on a comprehensive review of all relevant materials, providing guidance on the procedural aspects of amalgamation approvals in such cases.
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