Provisions of Section 72A would be applicable only when ‘amalgamating company’ and not ‘amalgamated company’ has accumulated losses

Wrigley India Private Ltd Vs ACIT (ITAT Delhi)- Whether the Tax Officer has, inter alia, erred in disallowing the claim of brought forward losses and un absorbed depreciation of the Taxpayer post amalgamation?

The Tribunal agreed with the position taken by the Taxpayer by holding that:

– The conditions specified in Section 72A(2) of the IT Act are applicable only when amalgamating company has brought forward losses and un absorbed depreciation. However, in the Taxpayer^‟s case, the amalgamating company does not have brought forward losses and un absorbed depreciation and hence, the provisions do not apply

– Post amalgamation, more than 51% shareholding remains in the same hands which fulfils the conditions laid down in Section 79 of the IT Act

– Provisions of Section 78 of the IT Act are also not applicable in the Taxpayer^‟s case since it is not a firm and the amalgamating company does not have losses

– Since the scheme of amalgamation has been approved by the High Court, there is no reason to believe that the amalgamation was not for genuine business purposes and it was a colour-able tax device.