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TMI Blog2022 (3) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... J.Sathya Narayana Prasad For the Appellant : Mr.M.Swaminathan Senior Standing Counsel Mrs.K.G.Usharani Junior Standing Counsel For the Respondent : No appearance JUDGMENT R.MAHADEVAN, J. This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 08.06.2009 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in I.T.A.No.2159/Mds/2008, relating to the assessment year 2004-05. 2.By order dated 22.03.2010, this court admitted the aforesaid tax case appeal on the following substantial question of law: Whether the claim of carry forward losses under Section 72A of the Act, ought to have been allowed, where necessary conditions have not been satisfied? 3.Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td (supra). The Bench was considering an appeal against an order of the Appellate Authority for Industrial and Financial Reconstruction upholding an order of the BIFR refusing to grant the benefit of the provisions of Section 71 (a) of the Income Tax Act to the appellant upon amalgamation and sanction of a scheme by the BIFR. 14. After noting that that BIFR had been enacted in public interest, with a view to secure timely detection of sick and potentially sick companies owning industrial undertakings and to determine preventive, ameliorative, remedial and other measures required to be taken with respect to such companies, the Bench considered the various provisions of the SICA, in specific Section 32(2). 15. Reference is made to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing incentives and removing impediments in the way of such amalgamation which would not merely relieve the Government of uneconomical burden of taking over and running sick units but save the Government from social costs in terms of loss of production and unemployment. With such objective in view, in order to facilitate the merger of sick industrial units with sound ones and as and by way of offering an incentive in that behalf s. 72A was introduced in the Act where under by a deeming fiction the accumulated loss or unabsorbed depreciation of the amalgamating company is treated to be a loss or, as the case may be, allowance for depreciation of the amalgamated company in the previous year in which the amalgamation was effected; but the amalg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a when sanction was specifically required to be given by the Central Government upon recommendation of the Specific Officer thereunder. Thus, financial viability or otherwise, of the amalgamating company had to be determined first, in order to attract the provisions of Section 72A. However, after the enactment of the SICA and the Constitution of the BIFR, the question of sickness or robust health of the entity is to be determined by the Board. It is only when the Board was satisfied that it would have, in the first place, entertained applications for revival, sanctioning appropriate schemes for rehabilitation. Thus, a sanction by the BIFR implies that the requirements of Section 72(2) of the Act have been met. 17. This provision, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company is not financially viable, which is the effect of Section 3(o) of the said Act, and that the amalgamation is necessary or expedient in the public interest, which is the effect of Sections 17 and 18 of the said Act read together. Sanction of a scheme of amalgamation under Section 18 of the said Act necessarily implies that the requirements of Section 72A of the Income Tax Act have been met and the BIFR must exercise the power conferred upon it by Section 32(2} of the said Act and make the declaration contemplated by Section 72A of the Income Tax Act, The conditions for sanctioning a scheme under Section 18 of the said Act being the same as those required for a declaration under Section 72A of the Income Tax Act, the BIFR could not h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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