Sanctioned amalgamation scheme prevails over tax objections, with section 72A benefits linked to the effective merger date.

A sanctioned amalgamation scheme under the Sick Industrial Companies (Special Provisions) Act was treated as overriding inconsistent Income-tax Act provisions. The scheme and BIFR declaration fixed 1-2-1992 as the effective date of amalgamation, and that date governed the transfer for tax purposes. Business carried on by the amalgamating company during the relevant period was treated as carried on for the amalgamated company, supporting satisfaction of the section 72A conditions. The text also notes that the certificate requirement was regarded as complied with and that the sanctioned scheme operated as conclusive evidence of compliance unless set aside in proper proceedings under the special statute.

---

---

Issues: The substantive issue decided was whether the benefit under section 72A could be denied in respect of the amalgamation sanctioned by BIFR, including the questions whether the effective date of amalgamation could be 1-2-1992, whether the business of the amalgamating company could be treated as carried on by the amalgamated company for the relevant previous year, and whether the alleged absence of Central Government or CBDT consent invalidated the scheme for tax purposes.

Analysis: A scheme sanctioned under the Sick Industrial Companies (Special Provisions) Act has overriding effect over inconsistent provisions of the Income-tax Act. The sanctioned scheme and the BIFR declaration specifically fixed 1-2-1992 as the effective date of amalgamation, and that date governed the transfer for legal purposes. The business carried on by the amalgamating company during the relevant period was treated as carried on on behalf of the amalgamated company, so the statutory condition in section 72A(2)(i) was satisfied. The requirement relating to filing of the certificate under section 72A(2)(ii) was also treated as duly complied with in the light of the BIFR directions and the subsequent filing of the certificate. Further, the sanctioned scheme operated as conclusive evidence that the requirements relating to amalgamation had been complied with, and the scheme could not be denied effect in assessment proceedings unless set aside in proper proceedings under the special statute.

Conclusion: The benefit under section 72A could not be denied, and the assessee was entitled to the consequential set-off and carry forward of the amalgamating company's losses, depreciation and related allowances.

Final Conclusion: The sanctioned amalgamation scheme was held binding for tax purposes, with the special statutory regime prevailing over the Income-tax Act and the departmental objection to the amalgamation-based relief failing.

Ratio Decidendi: A scheme of amalgamation sanctioned under the special rehabilitation statute, once it has overriding effect and is not set aside in proper proceedings, must be given full legal effect in income-tax assessment, and the statutory benefits linked to that scheme cannot be denied on the ground of alleged procedural or consent defects.

---