2022 (4) TMI 1283 - HC - Income Tax

Set off of loss of the Company merged with it as per the Scheme formulated and sanctioned by BIFR and approved by AAIFR - Whether Tribunal was right in law in not permitting the set off of loss when the Nodal Authority / Director General of Income Tax has conveyed its approval for grant of reliefs and concessions under section 139(3) and 79 read with 72A of the Income Tax Act besides waiver of interest, penal interest, penalties etc. under Income Tax Act? - HELD THAT - The appellant / assessee as well as the respondent / Revenue jointly, referring to the judgement 2019 (2) TMI 1780 - MADRAS HIGH COURT in respect of the assessee's own case relating to the assessment year 2004-05, the identical question of law was raised in that case and the same was decided in favour of the assessee and against the Revenue.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding set off of loss from merged company and approval for reliefs under Income Tax Act.

Analysis:
The tax case appeal challenged the order of the Income Tax Appellate Tribunal related to the assessment year 2006-2007. The substantial questions of law raised included the entitlement for set off of loss from a merged company and the approval for reliefs under the Income Tax Act. The appellant argued that a similar question of law was decided in their favor in a previous case. The judgment referred to the provisions of the Sick Industrial Companies (Special Provisions) Act and the Income Tax Act, specifically Section 32(2) of SICA and Section 72A of the Income Tax Act. The Supreme Court's interpretation highlighted the financial non-viability concept and the conditions for amalgamation of sick industrial units. The judgment emphasized that the BIFR's sanction implied meeting the requirements of Section 72A. The court noted that the action of the Assessing Authority was not erroneous based on the Supreme Court's dictum. The Commissioner's jurisdiction under Section 263 to revise an assessment order was discussed, emphasizing the need for concurrent satisfaction of conditions. The court dismissed the appeal filed by the Revenue, ruling in favor of the assessee based on the previous legal interpretations.

The respondent highlighted the dismissal of a Special Leave Petition by the Supreme Court against a similar judgment. Based on this decision, the substantial questions of law in the present appeal were answered in favor of the assessee, leading to the allowance of the tax case appeal without costs.