The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that an objection to scheme of Amalgamation can raise only before sanctioning by High Court and allowed adjustment on business loss and set off of capital loss.
M/s. G. K. & Sons Pvt. Ltd, the assessee filed its return on 14.09.2011 reporting a total income of Rs.1,26,27,638/-. It was observed that during the year under consideration six companies in which the public is not substantially interested, got merged with the assessee company.
After the adjustment of these losses with the current year’s income under the respective heads, a claim for carrying forward unabsorbed losses of Rs.42,98,533/- was made. The assessee had also claimed a loss on the sale of securities of Rs.2,57,986/- whereon at the time of holding these securities, earned exempt income in the form of dividend income. The AO disallowed the claim of the assessee.
It was observed that the scheme of merger/amalgamation was approved by the High Court of Calcutta vide its order dated 06.10.2010 by which the six companies along with their respective unabsorbed business loss and capital loss were allowed to be merged into the assessee company as referred in para 10(iii) of the said order.
A Coram of Shri Rajpal Yadav, Vice President and Shri Girish Agrawal, Accountant Member observed that the scheme of amalgamation once approved has a statutory force and objections, if any, should be raised by the Incometax Department before the sanction of the scheme by the High Court. The scheme once approved is binding on the Income-tax authorities and cannot be disturbed/reconsidered.
While dismissing the appeal of revenue, the ITAT allowed the adjustment of brought forward business loss of Rs.2,52,153/- against the current year’s business income and also the set off of brought forward capital loss of Rs.4,18,45,150/- as claimed by the assessee.
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