Amalgamation and loss carry-forward under tax law depend on express statutory ; scheme terms cannot override the statute.

A successor company in amalgamation can claim carried-forward losses only where the taxing statute expressly allows it. Under the Kerala Agricultural Income Tax Act, 1991, loss carry-forward is confined to the person who incurred the loss and is limited to eight years, so the amalgamated company could not appropriate the amalgamating company's accumulated losses as its own. A scheme of amalgamation cannot override the taxing statute, and reliance on Dalmia Power Ltd. was inapposite because the factual and statutory setting differed, including the absence of notice to the State and loss periods beyond the carry-forward limit.

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Issues: (i) Whether the amalgamated company could claim set-off of accumulated losses of the amalgamating company under the Kerala Agricultural Income Tax Act, 1991; (ii) Whether the scheme of amalgamation and the ruling in Dalmia Power Ltd. enabled such set-off despite the absence of notice to the State and the expiry of the eight-year carry-forward period.

Issue (i): Whether the amalgamated company could claim set-off of accumulated losses of the amalgamating company under the Kerala Agricultural Income Tax Act, 1991.

Analysis: Section 12 of the Kerala Agricultural Income Tax Act, 1991 permits carry forward of loss only for the person who sustained the loss, and only for a maximum period of eight years. The scheme provisions and Section 54 dealing with succession to business did not create any express entitlement in favour of the successor company to appropriate the predecessor's losses as its own. The Act contained specific provisions for death, succession, and liquidation, but none extended the right of set-off of accumulated losses of an amalgamating company to the amalgamated company in the manner claimed.

Conclusion: The claim for set-off was not maintainable and the finding was against the assessee.

Issue (ii): Whether the scheme of amalgamation and the ruling in Dalmia Power Ltd. enabled such set-off despite the absence of notice to the State and the expiry of the eight-year carry-forward period.

Analysis: The reliance on Dalmia Power Ltd. was held to be misplaced because that decision arose in the context of the Companies Act, 2013 and statutory notice to the Income Tax Department, whereas no notice was issued to the State of Kerala in the present amalgamation proceedings under the Companies Act, 1956. The scheme clause could not override the taxing statute. The High Court's factual finding that the losses related to a period beyond eight years independently defeated the claim under Section 12 of the Kerala Agricultural Income Tax Act, 1991.

Conclusion: The scheme and the cited precedent did not assist the assessee, and the set-off claim failed on both statutory and factual grounds.

Final Conclusion: The appeals were rejected because the amalgamated company had no statutory right under the Kerala Agricultural Income Tax Act, 1991 to claim the predecessor's carried-forward losses, and the claim was also barred by the eight-year limit.

Ratio Decidendi: A successor in amalgamation can claim carry-forward and set-off of losses only when the taxing statute expressly permits it; a scheme of amalgamation cannot confer a tax benefit contrary to the statute, and the statutory carry-forward period must also be satisfied.

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