Amalgamated Company Can Adjust Asset Value and Claim Depreciation Without Central Govt Approval: Bombay HC [Read Order]
The court ruled that an amalgamated company can adjust the written-down value of assets and claim depreciation without Central Government approval under Section 72A.
![Amalgamated Company Can Adjust Asset Value and Claim Depreciation Without Central Govt Approval: Bombay HC [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/Amalgamated-Company-Adjust-Asset-Value-and-Claim-Depreciation-Central-Govt-Approval-Bombay-HC-TAXSCAN.jpg "Amalgamated Company Can Adjust Asset Value and Claim Depreciation Without Central Govt Approval: Bombay HC [Read Order]")
In a recent ruling, the Bombay High Court held that an amalgamated company can adjust the written down value (WDV) of assets acquired from its amalgamating companies and claim depreciation on such adjusted value without obtaining prior approval from the Central Government under Section 72A of the Income Tax Act, 1961. Technova Imaging Systems Limited, the appellant, challenged the Income...
In a recent ruling, the Bombay High Court held that an amalgamated company can adjust the written down value (WDV) of assets acquired from its amalgamating companies and claim depreciation on such adjusted value without obtaining prior approval from the Central Government under Section 72A of the Income Tax Act, 1961.
Technova Imaging Systems Limited, the appellant, challenged the Income Tax Appellate Tribunal’s order, which had denied its claim for adjusting the WDV of assets from Technova Graphic Systems Pvt. Ltd. and Image Printmakers Pvt. Ltd., following their merger into the appellant company. The appellant had not claimed carry forward of depreciation but had recalculated the WDV based on depreciation actually allowed to the amalgamating companies.
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The Assessing Officer and the ITAT ruled that without Section 72A approval, such an adjustment was not permissible. The revenue argued that the scheme under Section 72A was mandatory for recognizing any benefit related to unabsorbed depreciation from amalgamating entities.
The appellant’s counsel argued that its claim was only for proper computation of depreciation under Section 32, read with Section 43(6), not for any carry forward benefit under Section 72A. It relied on the judgments in CIT v. Hindustan Petroleum Corporation Ltd. and EID Parry (India) Ltd., which support that WDV should reflect depreciation allowed, independent of Section 72A.
A division bench of Chief Justice Alok Aradhe and Justice M.S. Karnik observed that the appellant had not claimed any carry forward of losses or unabsorbed depreciation under Section 72A of the Income Tax Act.
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The court clarified that the condition of obtaining approval under Section 72A applies only in cases where there is a claim for carry forward and set-off of accumulated losses or unabsorbed depreciation, and not where the issue concerns only the computation of WDV for depreciation purposes.
The bench referred to the reasoning in EID Parry (India) Ltd., which clearly distinguished between carry forward of losses and the adoption of correct WDV post-amalgamation. The court quashed the ITAT’s order and restored the order of the Commissioner of Income Tax (Appeals), which had allowed the appellant’s claim.
To Read the full text of the Order CLICK HERE
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