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TMI Blog2019 (8) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... .08.2007 for the assessment years 1991-92. 2.The above Tax Case Appeal has been filed raising the following substantial questions of law:- "1. Whether the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the deduction granted u/s 32AB had to be withdrawn since the appellant was amalgamated with its parent company M/s.L. G.Balakrishnan & Bros.Ltd.? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the amalgamation of company would amount to "otherwise transferred" the assets of the company for the purpose of section 32AB(7) of Income Tax Act, 1961? 3.Whether on the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax (Appeals)-Coimbatore [CIT(A)], who accepted the case of the assessee and held that in the assessee's case amalgamation cannot be considered as a case of sale by one company of its assets to the other or a case where 'assets have been otherwise transferred'. 6. The Revenue preferred appeal before the Tribunal which reversed the findings of CIT(A) and restored the findings of the Assessing Officer. Thus, what is required to be seen is the effect of amalgamation. This issue has come up for consideration in various decisions, though not a case arising under Section 32AB of the Act but nevertheless, the legal principle laid down in those decisions, as regards, the effect of amalgamation can be applied. 7. In Meenu E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital invested by the assessee in the said companies and by the said amalgamation the assessee became the sole owner of the entire capital of the transferor companies. By virtue of the said amalgamations the assessee as the transferee-company became the sole repository of all the rights which flowed from or were embedded in the shares held by the assessee in the transferor-companies. For all the above reasons it was held that, there was not extinguishment of any right of the assessee as holder of the shares in the transferor-companies. 9. In Commissioner of Income Tax Vs. Renuga Textile Mills Ltd. reported in [(2015) 366 ITR 649 (Madras), it was held that on merger, the amalgamating companies looses its entity, however, by such merger th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the appeal filed by the assessee and rightly held that the assets in respect of which relief was allowed under Section 32AB of the Act are still held by the amalgamating company even after amalgamation and gets fused by one company. 13. Apart from the above, we find from the order passed by the Company Court in C.P.No.21 and 22 dated 19.04.1991, specific clause has been inserted in the order covering the allowance reserve which reads as follows: (f) It is specifically agreed that the Development Rebate Reserve, Investment allowance Reserve, General Reserve, Capital Reserve and Investment deposit account of CIL, immediately prior to the appointed date will, as a result or the amalgamation, retain their identity and will become par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessee's accounting the expenditure for repairs at an inflated figure and paying the tax at a reduced quantum. In our view, this can be a test to be applied to decide, as to whether, the machinery maintenance charges is allowed as expenditure. 17. Thus, the CIT(A) applied a wrong test and came to the a conclusion. The Tribunal, therefore, rightly reversed the order passed by the CIT(A) and we find no good grounds to interfere with the order of the Tribunal. Accordingly, substantial question of law no.3 is answered against the assessee. 18. Substantial question of law no.4, which according to the assesee would cover other issues, also pertains to the disallowance/addition for payments made to LGB, which the assessee claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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