The Tax Publishers2020 TaxPub(DT) 3905 (Karn-HC) : (2020) 317 CTR 0349 : (2020) 275 TAXMAN 0403

INCOME TAX ACT, 1961

Section 71A

Where Tribunal allowed set off of losses of amalgamating company against profits of assessee amalgamated company, considering that in order to claim benefit of set off, of accumulated loss, amalgamated company has to satisfy the conditions laid down in section 72A(2)(a)(b) and (c), since said condition is mandatory and Tribunal failed to verify compliance of said condition, matter was remanded back to Tribunal for adjudication.

Loss - Set-off and carry forward - Set-off of losses of amalgamating company against profits of assessee amalgamated company - Conditions precedent

Revenue challenged order of Tribunal allowing set off of losses of amalgamating company against profits of assessee amalgamated company. Revenue alleged that assessee did not substantiate genuineness of business purpose of amalgamation. Revenue further contended that both companies claimed the set off of same losses in their respective returns amounting to double claim of set off of same loss. Held: In order to claim benefit of set off, of accumulated loss, amalgamated company has to satisfy the conditions laid down in section 72A(2)(a)(b) and (c). It is pertinent to note that sub-section (2) starts with a non obstante clause. In other words, it shall have effect notwithstanding other provisions of the Act. Thus, compliance with conditions prescribed in section 72A(2) is mandatory. Tribunal did not advert to aforesaid aspect of issue and did not satisfy itself as to whether assessee complied with conditions laid down in section 72A(2) is sine qua non, to enable assessee to claim the benefit of the set off under section 72A. Since aforesaid aspect required factual adjudication, therefore, matter was remanded to Tribunal for afresh adjudication.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2008-09



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