Amalgamation appointed date governs section 72A carry-forward relief when Rule 9C conditions are satisfied.

An amalgamation scheme's appointed date controls the availability of carry-forward business loss and unabsorbed depreciation under section 72A when the statutory conditions under Rule 9C are met; a separate cut-off date for objections or concessions does not displace the appointed date. On that basis, the amalgamating company's accumulated loss and depreciation were available for set-off in the year of amalgamation. The disallowance relating to sales promotion expenses also did not survive because the factual basis for the deletion was not rebutted, and the addition had already been addressed under section 154. The Revenue's appeal was therefore unsuccessful in full.

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Issues: (i) Whether the assessee was entitled to set off the brought forward business loss and unabsorbed depreciation of the amalgamating company in assessment year 2006-07 under section 72A of the Income-tax Act, 1961; (ii) Whether the disallowance of sales promotion expenses was sustainable.

Issue (i): Whether the assessee was entitled to set off the brought forward business loss and unabsorbed depreciation of the amalgamating company in assessment year 2006-07 under section 72A of the Income-tax Act, 1961.

Analysis: The scheme of rehabilitation approved by BIFR fixed 1-1-2006 as the appointed date of amalgamation, while 30-9-2006 was only the cut-off date for considering reliefs and concessions under the scheme. The transfer of assets and liabilities took effect from the appointed date, and the assessee had also complied with the conditions prescribed under Rule 9C. On that basis, the carried forward business loss and unabsorbed depreciation of the amalgamating company were available to the assessee for set off in the year of amalgamation.

Conclusion: The assessee was entitled to the set off in assessment year 2006-07.

Issue (ii): Whether the disallowance of sales promotion expenses was sustainable.

Analysis: The addition had already been made in the order under section 154, and the Revenue did not rebut the factual basis for the deletion recorded by the first appellate authority.

Conclusion: The deletion of the addition was upheld.

Final Conclusion: The Revenue's appeal failed in entirety, and the relief granted to the assessee was sustained.

Ratio Decidendi: Where an amalgamation scheme fixes an appointed date for merger, the tax consequences under section 72A follow that appointed date, not a separate cut-off date meant only for objections or concessions, provided the statutory conditions for carry forward and set off are fulfilled.

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