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2017 (1) TMI 1613 - AT - Income TaxAllowing set off current year and brought forward losses and unabsorbed depreciation - Scheme of amalgamation - Held that:- Prior to date of sanction by BIFR and higher Courts, there is provision in the scheme that business done by Modern Terry Towels Ltd. shall be on behalf of the appellant company. The importance of the registration of reference cannot be undermined as once a reference is registered, the provisions of SICA get triggered. There can hardly be and doubt that once a scheme is formulated after a reference is gone through the process of Sections 17 & 18 of the SICA, the said scheme would have the force of law notwithstanding anything inconsistent therewith contained in any other law. Thus, neither the party making any concessions at the time of formulation of the scheme nor the company at whose behest the scheme is formulated and sanctioned can get out of the scheme. Accordingly, direct the AO to allow set off of current year losses and brought forward losses/unabsorbed depreciation of M/s. Modern Terry Towels Ltd. as per Section 72A against the income of the appellant. At the same time, the AO shall pass a protective assessment order in the case of appellant for A.Y. 2008-09 presuming that no amalgamation has taken place. Deduction u/Section 40(a) - Retrospectivity - Held that:- Hon'ble Apex Court in the case of G.E.India Technologies Centre (P) Ltd. vs CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] has held that in case whole remittance is not chargeable in India then there is no question of tax at source being deducted. Since the tax at source is nor required to be deducted then Section 40(a) will not be applicable. It is further noticed that Section 40((a)(ia) refers to commission payable to a resident. Hence, this provision is not at all applicable. Section 40(a) is applicable in respect of payments to non-resident and the payment should be in the nature of interest, royalty, fee for technical services or other sum chargeable under this Act. It is undisputed fact that the sum is commission and the word commission is not specifically mentioned in Section 40(a). The sum paid is not chargeable in India under Income Tax Act, 1961. Hence, Section 40(a) is not applicable
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