ALOK ARADHE, J. :
This appeal under s. 260A of the IT Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the Revenue. The subject-matter of the appeal pertains to the asst. yr. 2008-09. The appeal was admitted by a Bench of this Court vide order dt. 19th Feb., 2013 on the following substantial question of law :
"(i) Whether the appellate authorities were correct in allowing set off of losses of amalgamating company (M/s Tulip Apparel) against the profits of assessee amalgamated company amounting to Rs. 31.26 crores when the assessee has not substantiated the genuineness business purpose of amalgamation when the amalgamation was approved by the transferee company on 31st Jan., 2009 and the effect of amalgamation was from 31st March, 2008 and recorded a perverse finding
(ii) Whether the appellate authorities were correct in holding that the set off of losses is permissible when both the companies have claimed the set off of same losses in their respective returns amounting to double claim of set off of same loss contrary to the provisions of the Act, and recorded an perverse finding
(iii) Whether the appellate authorities were correct in not examining the fact that no return was revised after the amalgamation by clubbing the books of accounts, P&L a/c and the financial statements and Form 62 was not filed as required under s. 72A of the Act, and recorded a perverse finding "
2. Facts leading to filing of the appeal briefly stated are that assessee is in the business of manufacturing ready made garments. The assessee filed the return of income on 31st March, 2009 for asst. yr. 2008-09 declaring income as ‘nil’ after setting off, of loss of Rs. 31,36,33,145 in respect of M/s Tulip Apparels (P) Ltd., the amalgamating company. The AO by an order dt. 21st Dec., 2010 inter alia did not accept the contention of the assessee that effective date of amalgamation was 31st March, 2008. It was further held that amalgamating company got merged with the assessee only after 6th Feb., 2010 i.e., the date on which the scheme of amalgamation was approved. The AO therefore, disallowed the claim of set off of loss of M/s Tulip Apparel (P) Ltd. under s. 72A of the Act. The assessee filed an appeal before the CIT(A), who by an order dt. 21st Dec., 2010 inter alia held that effective date of amalgamation is 31st March, 2008 and the addition made by the AO was deleted. The appeal preferred by the assessee was allowed.
3. The Revenue thereupon filed an appeal before the Tribunal. The Tribunal by an order dt. 31st July, 2012 inter alia held that amalgamation takes effect from the appointed day as mentioned in the scheme of amalgamation. It was further held that finding of the AO that scheme of amalgamation is a device to avoid taxes is without any basis and is in the realm of surmises and conjectures. It was held that the amalgamation is deemed to have been effected on 31st March, 2008 and therefore, the claim of the assessee for set off is required to be allowed. Accordingly, the appeal preferred by the Revenue was dismissed. In the aforesaid factual background, the Revenue has preferred this appeal.
4. Learned counsel for the Revenue submitted that in order to claim the benefit of s. 72A of the Act, the conditions prescribed in s. 72A(2)(b)(iii) have to be complied with and in the instant case, the assessee failed to comply with the aforesaid conditions in as much as neither requirements contained in r. 9C of the IT Rules were complied with nor Form No. 62 was submitted. It is also urged that as a consequence of amalgamation, revised return ought to have been filed and the only object of amalgamation was to evade payment of tax. It is further submitted that amalgamation of the companies was not for business purposes. It is also submitted that neither the CIT(A) nor the Tribunal has considered the issue whether or not the assessee had complied with the requirements of r. 9C of the Rules, which is a mandatory requirement. In support of aforesaid contention, learned counsel for the Revenue has placed reliance on Division Bench decision of this Court in CIT vs. Sadashiva Sugars Ltd. (2017) 80 taxmann.com 352 (Kar).
5. On the other hand, learned counsel for the assessee submitted that CIT(A) as well as the Tribunal have concurrently held that the date of amalgamation is 31st March, 2008. Attention of this Court has also been invited to minutes of meeting of board of directors dt. 11th March, 2008. It is also pointed out that information with regard to amalgamation was given to Bombay Stock Exchange Ltd. as well as National Stock Exchange Ltd. on 12th March, 2008. It is also pointed out that the scheme approved by this Court mentions the appointed date as 31st March, 2008, which has to be accepted as date of amalgamation. Learned counsel for the assessee has also referred to s. 230(5) of the Companies Act. It is also argued that there is no non compliance with provisions of s. 72A(2)(b)(iii) of the Act. In support of aforesaid submissions, reliance has been placed on decisions in Bhoruka Engineering Inds. Ltd. vs. Dy. CIT (2013) 261 CTR (Kar) 287 [LQ/KarHC/2013/843] : (2013) 90 DTR (Kar) 209 : (2013) 218 Taxman 259 (Kar) , Marshall Sons & Co. (India) Ltd. vs. ITO (1997) 138 CTR (SC) 1 : (1997) 223 ITR 809 (SC) , Orissa Mining Corporation Ltd. vs. CIT (2007) 208 CTR (Orissa) 380 : (2007) 293 ITR 502 (Orissa) .
6. We have considered the submissions made by learned counsel for the parties and have perused the record. Before proceeding further, it is apposite to take note of relevant extract of the provisions viz., ss. 72A(1), (2) and (3), which read as under :
"72A. Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc.—(1) Where there has been an amalgamation of—
(a) a company owning an industrial undertaking or a ship or a hotel with another company; or
(b) a banking company referred to in cl. (c) of s. 5 of the Banking Regulation Act, 1949 (10 of 1949) 45 with a specified bank; or
(c) one or more public sector company or companies engaged in the business of operation of aircraft with one or more public sector company or companies engaged in similar business,
then, notwithstanding anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss or, as the case may be, allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected, and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly.
(2) Notwithstanding anything contained in sub-s. (1), the accumulated loss shall not be set off or carried forward and the unabsorbed depreciation shall not be allowed in the assessment of the amalgamated company unless—
(a) the amalgamating company—
(i) has been engaged in the business, in which the accumulated loss occurred or depreciation remains unabsorbed, for three or more years;
(ii) has held continuously as on the date of the amalgamation at least three fourths of the book value of fixed assets held by it two years prior to the date of amalgamation;
(b) the amalgamated company—
(i) holds continuously for a minimum period of five years from the date of amalgamation at least three-fourths of the book value of fixed assets of the amalgamating company acquired in a scheme of amalgamation;
(ii) continues the business of the amalgamating company for a minimum period of five years from the date of amalgamation;
(iii) fulfils such other conditions as may be prescribed to ensure the revival of the business of the amalgamating company or to ensure that the amalgamation is for genuine business purpose.
(3) In a case where any of the conditions laid down in sub-s. (2) are not complied with, the set off of loss or allowance of depreciation made in any previous year in the hands of the amalgamated company shall be deemed to be the income of the amalgamated company chargeable to tax for the year in which such conditions are not complied with."
7. Thus, from perusal of the aforesaid provision, it is axiomatic that in order to claim benefit of set off, of accumulated loss, the amalgamated company has to satisfy the conditions laid down in ss. 71A(2)(a), (b) and (c) [sic-72A(2)(a), (b) and (c)]. It is pertinent to note that sub-s. (2) starts with a non obstante clause. In other words, it shall have effect notwithstanding other provisions of the Act. Thus, the compliance with the conditions prescribed in s. 71A(2) [sic-72A(2)] of the Act is mandatory. However, it is pertinent to mention here that the Tribunal has not adverted to the aforesaid aspect of the issue and has not satisfied itself whether the assessee has complied with the conditions laid down in s. 71A(2) [sic-72A(2)] of the Act is sine qua non, to enable the assessee to claim the benefit of the set off under s. 71A (sic.-72A) of the Act. Since, the aforesaid aspect requires factual adjudication, therefore, we deem it appropriate to remit the matter to the Tribunal afresh for adjudication.
In view of preceding analysis, it is not necessary to answer the substantial questions of law framed by this Court. In the result, the order passed by the Tribunal is hereby quashed and the matter is remitted to the Tribunal to decide the issue afresh in the light of observations made in this order.
In the result, the appeal is disposed of.