TaxTMI 
TaxTMI 
2017 (9) TMI 490
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.... (amalgamating company) prepared was as under : Asstt. Year Business Loss Depreciation Total 1985-86 18,79,504 16,39,602 35,19,106 1986-87 22,53,705 14,09,485 36.63,190 1987-88 - - - 1988-89 33,61,672 20,58,89 54,20,570 1989-90 22,67,739 28,92,151 51,59,890 1990-91 21,93,851 20,72,702 42,66,553 1991-92 21,83,983 10,63,906 32,47,899 Add: Depn. Claimed in A.Y. 1987-88 totally disallowed. 1,41,40,464 1,11,36,744 2,52,77,208 - 12,19,103 12,19,103 Admissible losses u/s 72(a) restricted to the tax relief of Rs. 75.00 lakhs i.e. equivalent loss. 1,41,40,464 1,23,55,847 2,64,96,311 1,41,40,464 3,52,290 1,44,92,754 Balance inadmissible u/s 72(A) 0 1,20,03,557 1,20,03,557 The claim of the assessee was for written down value of Rs. 1,20,03,557/­ of the assets of the amalgamating company and the consequent claim was for depreciation of Rs. 27,09,294/­ for the Assessment Year 1992­93. The Assessing Officer allowed the claim of depreciation to the extent of Rs. 3,52,290/­ and rest of the claim for depreciation was rejected by the assessment order dated 24.­2­.1995. The Commissioner of Income Tax (Appeals), Nagpur (CIT) ma....
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....concerned was specified by BIFR, there was no way the assessee could get benefit beyond what was the intention of BIFR. Since the tax benefit had been specified under Section 72A of the Income Tax Act, the assessee could not go beyond the purview and claim additional depreciation and on what had worked out to be inadmissible under Section 72A of the Income Tax Act read with the terms of the order dated 6­5­1992 passed by BIFR. The Assessing Officer, therefore, disallowed the claim for depreciation of Rs. 27,09,294/­ and added it in the income of the assessee for the Assessment Year 1992­93. 5. The CIT in appeal, referring to the decision of the Division Bench of this Court in the case of Commissioner of Income Tax v. Hindustan Petroleum Corporation Ltd., reported in (1991) 187 ITR 0001, holds that though the appellant in the said decision was held entitled to enhancement of written down value of the assets, the said decision cannot be applied to the facts of the present case, for the reason that it was delivered before insertion of Section 72A of the Income Tax Act, which now specifically lays down as to how and in what circumstances the amalgamated company can ava....
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.... depreciation on the value of Rs. 1,20,03,557/­ remaining inadmissible. It holds that the assessee was not entitled to more benefits than the limitation of Rs. 75,00,000/­ specified in the order passed by BIFR on 6­5­1992. 9. Shri Dewani, the learned counsel appearing for the assessee-­company, heavily relied upon the decision of the Division Bench of this Court in the case of Hindustan Petroleum Corporation Ltd., cited supra, to urge that in terms of Section 32(2) read with Section 43(6) and the Explanations 2A and 3 of the Income Tax Act, the assesee-­company was entitled to depreciation of Rs. 27,09,294/­ on the value of the assets of Rs. 1,23,55,847/­ taken over of the amalgamating company. 10. We have gone through the said decision. The assessment year involved in the said decision was of 1975­76 and the contention raised was that the unabsorbed depreciation of Rs. 21,42,815/­ of the amalgamating company be treated and/or allowed as the depreciation of the current year, as the amalgamating company became non­existent, and the depreciation of these assets was allowable in the hands of the assessee. The Tribunal did not accept the cl....
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.... Ors., reported in (1992) 195 ITR 0232. The relevant portion of this judgment in para 10 is reproduced below : "10. ... ... ... While examining the application under s. 72A, the purpose and intent of insertion of the section has to be kept in view. Sec. 72A was enacted with a view to provide an incentive to robust companies to take over and amalgamate with the companies which would otherwise become a burden on the economy. It is no doubt true that when a declaration under s. 72A is granted, the amalgamated company does receive benefits, inasmuch as it is able to take advantage of the unabsorbed depreciation and accumulated losses. But this is precisely the incentive which is given to the healthy companies and, we feel, that the legislative intent of giving such incentive should not ordinarily be set at naught. The Specified Authority and the Central Government should take an overall view of the matter and come to a pragmatic and practical conclusion as to whether the conditions specified in s. 72A are satisfied or not. We may here note that where the provisions of s. 72A are not misused, there is further safeguard which are provided in s.....