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TMI Blog2005 (4) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... sick company in the hands of the assessee company. Various financial institutions which had advanced loans to the sick company agreed to waive portion of the over due interest relating to the period to 1-4-1977. 2) The relevant assessment year in this case is 1983-84. Originally assessment was completed on 18-12-1986. Against this order of assessment the assessee filed appeal and the income was finally determined vide order dated 5-1-1988. Subsequently a notice under Section 148 was issued to the assessee on 28-3-1988. In response to this notice the assessee filed revised return of income. The ITO proposed to treat the waiver of interest portion as assessee s income under Sec.41(1) of the Act. The assessee opposed the proposal made by IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has referred the following question of law for our opinion. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding that the over due interest waived by the financial institutions amounting to ₹ 25.02 lakhs is not assessable in the hands of the assessee? 4). Sri M. V. Seshachala, learned Standing counsel for Revenue contends that the amalgamation took place with effect from 1-4-1977. As a result of amalgamation the accumulated losses of sick company were taken over the assessee company in terms of Sec. 72 of the Act. He submits that the benefit of waiver of interest is accured to the assessee and as such the same is assessable in the hands of assessee. The Tribunal committed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. The Supreme Court in Saraswathi Industrial Syndicate Ltd. (supra) held that the assessee who could be assessed under Section 41(1) of the Act, should be the same as the assessee in whose hands the expenses had been allowed and therefore in a scheme of amalgamation, the remission of liability of the amalgamating company could not be assessed in the hands of the amalgamated companies. This is a case of succession of business and not amalgamation. The Apex Court had not considered a situation where the assessee company had obtained the benefit of carry forward loan of sick company under Section 72-A of the Act, by amalgamation. In the instant case the assessee had the benefit of carry forward losses of sick company and the assessee comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. The Finance Minister in his Budget speech while introducing Section 72-A of the Act, stated that the sickness among industrial undertakings was regarded as a matter of grave national concern inasmuch as closure of any sizable manufacturing unit in any industry entailed social costs in terms of production loss and unemployment as also waste of valuable capital assets, and experience had shown that taking over of such sick units by Government was not always a satisfactory or economical solution; it was felt that a more effective method would be to facilitate amalgamation of sick industrial units with sound ones by providing incentives and removing impediments in the way of such amalgamation with would not merely relieve the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X
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