Section 72A relief turns on reviewable satisfaction, commercial non-viability, and public interest in genuine industrial revival.

Section 72A relief is subject to judicial review where the authority misdirects itself in law, relies on irrelevant considerations, or reaches an unreasonable conclusion. Financial non-viability for clause (a) is assessed as commercial sickness from temporary adverse conditions, judged by liabilities, losses, liquidity, solvency, and profitability; on the facts, the undertaking was commercially insolvent before amalgamation, so the viability finding was unsustainable. Public interest under clause (b) was also satisfied because the amalgamation preserved production of an essential commodity, protected employment, avoided closure of a sick unit, conserved productive capacity, and reduced the burden on the public exchequer.

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Issues: (i) Whether the recommendation of the specified authority and the Central Government's refusal of relief under section 72A of the Income-tax Act, 1961, on the ground that the amalgamating company was financially viable immediately before amalgamation, were liable to judicial review and interference; (ii) Whether the amalgamating company was financially non-viable immediately before amalgamation so as to satisfy clause (a) of section 72A(1); (iii) Whether the amalgamation was in public interest so as to satisfy clause (b) of section 72A(1).

Issue (i): Whether the recommendation of the specified authority and the Central Government's refusal of relief under section 72A of the Income-tax Act, 1961, on the ground that the amalgamating company was financially viable immediately before amalgamation, were liable to judicial review and interference

Analysis: A decision resting on subjective satisfaction is amenable to judicial review where the authority misdirects itself in law, acts on irrelevant or extraneous considerations, or reaches a conclusion that no reasonable authority properly informed could reach. The power under section 72A had to be exercised in accordance with the statutory purpose of assisting genuine revival of a sick unit and not on a mistaken conception of financial non-viability.

Conclusion: Yes. The impugned decision was open to judicial review and liable to be interfered with.

Issue (ii): Whether the amalgamating company was financially non-viable immediately before amalgamation so as to satisfy clause (a) of section 72A(1)

Analysis: Financial non-viability under section 72A means sickness brought about by temporary adverse financial conditions that disables a unit from standing on its own, judged in the light of liabilities, losses, solvency, liquidity, and profitability. The authority erred in treating temporary liquidity problems as basic viability, in assuming continuing support from the amalgamated company contrary to the legal limits on financial assistance, in relying on an out-of-date admission, and in treating market value of assets as the test for net worth. On the material, the undertaking had suffered heavy losses, strained liquidity, and eroded solvency, and was commercially insolvent immediately before amalgamation.

Conclusion: No. Clause (a) was satisfied and the finding of financial viability was unsustainable.

Issue (iii): Whether the amalgamation was in public interest so as to satisfy clause (b) of section 72A(1)

Analysis: The record showed that the amalgamation preserved production of an essential commodity, protected employment, avoided closure of a sick industrial unit, conserved productive capacity, and spared the public exchequer the burden of taking over the undertaking. The materials before the authority and the contemporaneous proceedings supported the view that the amalgamation was in public interest.

Conclusion: Yes. Clause (b) was fulfilled.

Final Conclusion: The refusal of relief under section 72A could not stand, and the directions for reconsideration and consequential statutory action were upheld with a shorter time for disposal of the application.

Ratio Decidendi: Under section 72A of the Income-tax Act, 1961, the Central Government's satisfaction is reviewable where it is founded on a wrong legal approach or irrelevant considerations, and financial non-viability must be assessed as commercial sickness from temporary adverse conditions judged by liabilities, losses, liquidity, and solvency.

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