482. Whether certificate from specified authority is required only once for the year in which amalgamation has taken place or for every year in which benefit is claimed
Circular No. 350 was issued by the Central Board of Direct Taxes on 29 September 1982. Its subject is 482. Whether certificate from specified authority is required only once for the year in which amalgamation has taken place or for every year in which benefit is claimed.
Holds that the certificate of the specified authority under section 72A(2)(ii), that adequate steps have been taken for the rehabilitation or revival of the amalgamating company's business, is needed not just for the year of amalgamation but for every year in which the benefit is claimed. Section 72A(2) says the accumulated loss shall not be set off or carried forward and unabsorbed depreciation shall not be allowed unless the two conditions in it are fulfilled, and the Board reads that as a yearly requirement. Certificates are accordingly required for all the years during which the revival scheme is implemented and for every assessment year in which the amalgamated company claims carry forward and set-off of the amalgamating company's loss.
A doubt had been raised whether the certificate was required only once, for the year of amalgamation, or for every year in which the section 72A benefit was claimed.
| Under the 1961 Act | Now |
|---|---|
| s.72A | s.116 |
482. Whether certificate from specified authority is required only once for the year in which amalgamation has taken place or for every year in which benefit is claimed
1. In cases where the Central Government issues under section 72A(1), a declaration that the amalgamation of a company (which was not financially viable by reason of its liabilities, losses, etc.) with another company has been in the public interest, the accumulated losses and the unabsorbed depreciation of the amalgamating company for the year in which the amalgamation was effected and the amalgamated company is allowed to set-off and carry forward such loss, etc., accordingly. Such set-off and carry forward of loss, etc., is subject to the condition under section 72A(2)(ii) that "the amalgamated company furnishes, along with its return of income for the said assessment year, a certificate from the specified authority to the effect that adequate steps have been taken by that company for the rehabilitation or revival of the business of the amalgamating company".
2. A doubt has been raised as to whether the certificate from the specified authority under section 72A(2)(ii) is required only once for the year in which the amalgamation has taken place or for every year in which the benefit under section 72A is claimed.
3. The issue has been examined and the Board have been advised that section 72A(2) of the Act provides that 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 the two conditions specified therein are fulfilled. On a perusal of the two conditions, it would appear that the certificate from the specified authority should be required not only for the year of amalgamation but also for the subsequent years. Such certificates would be necessary for all the years during which the revival scheme is implemented. The certificate will also be required for all the assessment years in which the carry forward and set-off of unabsorbed loss, etc., of the amalgamating company is claimed by the amalgamated company. There is nothing in sub-section (2) of section 72A to indicate that the benefit of that section can be claimed only once, for the year of amalgamation.Circular : No. 350 [F. No. 208/16/81-IT(A-II)], dated 29-9-1982.
In an assessment where set-off of a predecessor's carried forward loss is refused in a later year for want of the specified authority's certificate.
Source: the Income Tax Department’s own published text — its page for this instrument.
