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2017 (2) TMI 1463 - HC - Income TaxSanction of Scheme of Amalgamation recalled - Revenue will suffer loss as it cannot recover tax on the income of the Transferor Company - Both the companies suffering losses - Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger u/s 72A - HELD THAT:- No bar either in the Companies Act, or in the Income Tax Act, which prevents the two companies, which are suffering losses, from amalgamating. Section 72A of the Act deals with the post-amalgamation scenario. By no stretch of imagination, does Section 72A of the Act debar two companies from amalgamating. In fact, Section 72A of the Act deals with the relationship between the Income Tax Department, and the assessee in the post-amalgamated period. Therefore, the contention being raised by the learned counsel for the Revenue that under Section 72A of the Act, amalgamation between two companies suffering from losses is prohibited, the said argument is highly misplaced. Since Section 72A of the Act does entitle the amalgamated company to claim set off and carry forward of losses and allowance depreciation, therefore, if any benefit accrues to the amalgamated Company, that benefit cannot be denied ostensibly on the ground that it is the Revenue Department that would suffer. Hence, the contention being raised by the learned counsel for the Revenue that in case the amalgamation were allowed, it is the Revenue Department that would suffer, as it would not be able to recover the tax, as it will be entitled to, even the said argument is unacceptable. Almost three years have gone by since the amalgamation was permitted by this Court. To turn the historical clock back to the year 2014, may cause injustice to the amalgamated Company. Therefore, it is too late for the Revenue Department to argue that the order dated 4.4.2014 should be recalled by this Court.
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