TMI Blog2022 (4) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... MADRAS HIGH COURT ] in respect of the assessee's own case relating to the assessment year 2004-05, the identical question of law was raised in that case and the same was decided in favour of the assessee and against the Revenue. - TCA.No.233 of 2012 - - - Dated:- 21-3-2022 - Honourable Mr. Justice R. Mahadevan And Honourable Mr. Justice J.Sathya Narayana Prasad For the Appellant : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar For the Respondent : Mr.M.Swaminathan, Senior Standing Counsel JUDGMENT R.MAHADEVAN, J. This tax case appeal has been filed by the appellant / assessee, challenging the order dated 19.09.2011 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in I.TA.No.1164/Mds/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which is rehabilitation and revival of sick industries. The provisions of section 32(2) thereof read as under: '32. Effect of the Act on other laws.? - (1)....... (2)Where there has been under any scheme under this Act an amalgamation of a sick industrial company with another company, the provisions of Section 72-A of the Income Tax Act, 1961 (43 of 1961), shall, subject to the modifications that the power of the Central Government under that section may be exercised by the Board without any recommendation, by the specified authority referred to in that section, apply in relation to such amalgamation as they apply in relation to the amalgamation of a company owning an industrial undertaking with another company.' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new provision of s. 72A was introduced in the Act as it will throw light on what was the mischief or situation that was intended to be remedied by its introduction as also the true concept of financial Non- viability. From the budget speech of the Finance Minister, the Notes on Clauses of the Finance Bill (No. 2) of 1977 and the Memorandum explaining to provisions of the said Bill it will appear clear that sickness among industrial undertaking was regarded as a matter of grave national concern inasmuch as closure of any sizable manufacturing unit in any industry entailed social costs in terms of loss of production and unemployment as also waste of valuable capital assets, and experience had shown that taking over of such sick units by Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of an undertaking has been equated with the 'sickness' of such undertaking and obviously in the context of its revival by a sound undertaking the sickness must be of a temporary character and not any basic or permanent sickness. An undertaking which is basically or potentially nonviable will ordinarily be incapable of revival and would face a closure; in other words, the financial non-viability spoken of by the section must refer to sickness brought about by temporary adverse financial circumstances that disables the unit to stand and work on its own. This is also made clear by the provision contained in cl. (a) of sub-s. (1) which states that the financial non-viability of the amalgamating company has to be judged by reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority, be satisfied that the amalgamating company was not, immediately before the amalgamation, financially viable by reason of its liabilities, losses and other relevant factors, and that the amalgamation was in the public interest, By reason of Section 32(2) of the said Act, where there has been under any scheme thereunder an amalgamation of a sick industrial company with another company, the provisions of Section 72A of the Income Tax Act shall apply in relation to such amalgamation, subject to this modification that the power of the Central Government is to be exercised by the BIFR without the necessity of a recommendation by the specified authority mentioned in Section 72A of the Income Tax Act. This is because, for the purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt is thus, the correct one. 19. The jurisdiction exercised by the CIT to correct the alleged error in assessment was in terms of section 263 of the Act. Section 263 empowers the Commissioner of Income tax to revise an order of assessment if the order in question is erroneous and prejudicial to the interests of the revenue, both conditions to be satisfied concurrently. The action of the assessing officer, though prejudicial, can hardly be termed as 'erroneous' in so far as the officer has followed the dictum laid down by the Supreme Court in the case of Indian Shaving products (supra). Thus, in the absence of concurrent satisfaction of the two conditions under section 263 of the Act, the action of the CIT was contrary to statu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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