Effect of order passed by Board for Industrial and Financial Reconstruction under scheme for rehabilitation of sick units on determination of losses

1. The Board had issued two circulars, Circular No. 523, dated October 5, 1988 (Annex  I) and Circular No. 576, dated August 31, 1990 (Annex II) in connection with the procedure to be followed in respect of grant of ‘consent’ by the Central Government in cases involving financial assistance to be given under Direct Tax Laws for rehabilitating sick industries under Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).

2. While issuing the two circulars, the provisions of section 19(2) of SICA were not considered. According to section 19(2), all parties concerned with giving ‘financial assistance’ for the rehabilitation scheme should give their ‘consent’.

3. The Board had withdrawn with immediate effect the above Circular Nos. 523 and 576 vide its letter of even numbers dated 30-12-1993.  The said letter to AAIFR and BIFR clarified that each case of fiscal concession of ‘financial assistance’ under Direct Tax Laws will now be considered in each individual case on merits for the purpose of consent as contemplated in section 19(2) of SICA, 1985 and consent or denial of consent will be conveyed to BIFR by the Central Government.  The modal agency for coordination between the Board for Industrial and Financial Reconstruction (BIFR) and, Central Board of Direct Taxes and Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and Central Board of Direct Taxes will be the Director General of Income-tax (Admn.), 7th Floor, Mayur Bhawan, New Delhi-110 001.  Cases already decided in accordance with the Circular Nos. 523 and 576 were however, not required to be reopened.

Circular : No. 683, dated 8-6-1994.

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