HIGH COURT OF DELHI
Government of India (Deptt. of Revenue), Director General of Income-tax
versus
Orient Vegetax Pro Ltd.
W.P. (C) No. 4163 OF 2012
CM NO. 8647 OF 2012
JULY 13, 2012
ORDER
Sanjay Kishan Kaul, J.
The respondent no.1 company went into financial difficulties and thus approached the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as ‘the said Act’). In the proceedings before the BIFR, a draft rehabilitation scheme was formulated and duly circulated. Undisputedly, the petitioner/income tax department did not file any objections to the draft scheme, by the time it came up for consideration before the BIFR for finalization on 15.10.2007, but were represented through counsel before the BIFR.
2. The proceedings of the BIFR dated 15.10.2007 show that the income tax department canvassed a proposition that the various concessions sought from the income tax department should be directed to be considered by the department, and should not be granted by the BIFR itself. One of the aspects of concession was the benefit under Section 72A of the Income Tax Act, 1961 from the date of the sanction of the scheme. This plea was opposed by the respondent company. The BIFR accepted the plea of the respondent company that the aspect of relief flowing from Section 72A of the Income Tax Act should be granted by the BIFR itself, and should not be asked to be considered by the department. However, simultaneously, the BIFR directed modification of the other paragraphs of the draft scheme relating to the concession sought from the income tax department, whereby the department was asked to consider the grant of the various concessions.
3. The income tax department, aggrieved with the aforesaid aspect, preferred an appeal before the AAIFR which was dismissed on 23.06.2011, and is now sought to be assailed in the present writ petition under Article 226 of the Constitution of India.
4. We may, at the threshold, note that the writ petition has been filed only on 17.05.2012, after almost 11 months of the passing of the order of the AAIFR. The petition is completely silent on the aspect of the inordinate period of delay in challenging the order of the AAIFR and the oral explanation for the same, given by the learned counsel for the petitioner, is the routine one, i.e. the time consumed in obtaining of sanctions and permissions from various authorities and the normal lethargy of government departments.
5. Such a plea, in our considered view, cannot be canvassed and accepted in view of the judgment of the Supreme Court in the Office of the Chief Post Master General v. Living Media Ltd. [2012] 207 Taxman 163/20 taxmann.com 347. Suffice it to say, that the conclusions drawn in the judgment are to the effect that all government bodies, their agencies and instrumentalities must be informed that unless they have reasonable and acceptable explanation for delay and there has been a bona fide effort in approaching the Court, there is no need to accept the usual explanation that the file was kept pending for several months/years due to considerable degree of procedural red-tape in the process.
6. We have, however, considered it appropriate to deal also with the merits of the controversy, as we have heard learned counsel for the petitioner at some length.
7. In order to appreciate the plea of learned counsel for the petitioner, it is appropriate to extract the relevant portion of Section 72A of the Income Tax Act as it existed prior to 01.04.2000, and as it exists now, after amendment since 01.04.2000.
8. Relevant portion of Section 72A of the Income Tax Act, as it stood before 01.04.2000 read:
“72-A. Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation – (1) Where there has been an amalgamation of a company owning an industrial undertaking or a ship with another company and the Central Government, on the recommendation of the specified authority, is satisfied that the following conditions are fulfilled, namely :-
(a) the amalgamating company was not, immediately before such amalgamation, financially viable by reason of its liabilities, losses and other relevant factors;
(b) the amalgamation was in the public interest; and
(c) such other conditions as the Central Government may, by notification in the Official Gazette, specify, to ensure that the benefit under this section is restricted to amalgamations which would facilitate the rehabilitation or revival of the business of the amalgamating company, then, the Central Government may make a declaration to that effect, and thereupon, 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 depreciation of the amalgamated company for the previous year in which the amalgamation was effected, and the other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly…”
9. The relevant extract of the provision, as on date, reads as follows:
“72-A. 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 clause (c) of Section 5 of the Banking Regulation Act, 1949 (10 of 1949) 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.]
