TMI Blog2015 (11) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Authority [CIT (Appeals)] as well as the Tribunal, in this regard that the amalgamating company was engaged in the business of generation of power much prior to three years from the date of amalgamation of the Company, cannot be faulted. In the facts of this case, it cannot be disputed that the engagement of the amalgamating company in the business of power generation had begun from the year 2000, even though the production or generation of power, i.e., the commencement of business may have been with effect from 08.08.2003. We may also mention that Section 72A of the Act provides for set off of accumulated loss and unabsorbed depreciation, which is for the benefit of the assessee-amalgamated company. Thus, in our view, when a provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of power generation with effect from 08.08.2003, which was by way of expansion of its business. 2. For the relevant year 2005-06, the assessee-amalgamated company had declared its business income of ₹ 24,64,96,704/- and the brought forward losses of the amalgamating company, being ₹ 21,33,48,234/-, were set off against the above income. Out of the aforesaid business loss of amalgamating company, which was set off against the income of the respondent-amalgamated company for the relevant assessment year, the Assessing Officer disallowed the business loss and unabsorbed depreciation amounting to ₹ 3,48,87,613/- as the same was the business loss from the business of power generation which was brought forward and claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of sugar for the past several years but it had commenced its business of power generation only on 08.08.2003, which was within three years of the amalgamation, and thus the benefit of carrying forward of such losses of the amalgamating company could not be granted in favour of the assessee-amalgamated company. It is contended that even though the activities for establishing the power generation unit may have commenced earlier, but the benefit of Section 72A of the Income Tax Act, 1961 (for short the Act ) would be granted to the assessee-amalgamated company only after the amalgamating company had commenced business, which it did so on 08.08.2003, which was within the period of three years prior to the date of amalgamation, which was 01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant Sub-sections (1) and (2) of Section 72A of the Act are reproduced below: Sec.72A: Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc. 72A. (1) Where there has been an amalgamation of- (a) a company owning an industrial undertaking or a ship or a hotel with another company; or (b) a banking company referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) with a specified bank; or (c) one or more public sector company or companies engaged in the business of operation of aircraft with one or more public sector company or companies engaged in similar business, then, notwithstanding anyt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evival of the business of the amalgamating company or to ensure that the amalgamation is for genuine business purpose.] 3. xxxx 4. xxxx 5. xxxx 6. xxxx Provided .. 6(A) xxxx Provided . 7. xxxx .. 8. It is not in dispute that the amalgamating company-Shree Vani Sugars and Industries Ltd., was amalgamated with the respondent-assessee company with effect from 01.03.2005, which falls in the assessment year 2005-06. It is also not in dispute that the amalgamating company was in business since 1984. It is admitted that in the year 2000, the amalgamating company had started work for establishment of power generation business and after establishing the unit, the power generation or su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny was engaged in the business of generation of power much prior to three years from the date of amalgamation of the Company, cannot be faulted. In the facts of this case, it cannot be disputed that the engagement of the amalgamating company in the business of power generation had begun from the year 2000, even though the production or generation of power, i.e., the commencement of business may have been with effect from 08.08.2003. 12. Even otherwise, a perusal of Sub-section (2) of Section 72A of the Act would go to show that it is the loss of the amalgamating company as a whole, which is set off or carried forward, and not of a particular unit or division of that amalgamating Company. It is the amalgamating company, which should be in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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