The Bombay High Court has held that amalgamated company can claim depreciation on adjusted written down value of assets without central govt. approval under section 72A of the Income Tax Act.
The bench of Chief Justice Alok Aradhe and Justice M.S.Karnik has observed that the Tribunal was not justified in law in holding that in view of insertion of Section 72A in the Income Tax Act, 1961, the appellant (being the amalgamated company) not having obtained approval of the Central Government was not entitled to adjust the written down value of the assets of the amalgamating companies on the basis of depreciation actually allowed to them and to claim depreciation on such adjusted written down value of the assets of the amalgamating companies.
The appellant/assessee is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of manufacture and sale of aluminium based presensitised lithographic plates, chemicals and polyester based reprographic films for printing and other allied image transfer industries.
TechNova Graphic Systems Pvt. Ltd. had filed a petition before this Court for being amalgamated with TechNova Platemaking Systems Limited (now known as TechNova Imaging Systems Limited) that is, the appellant. TechNova Platemaking Systems Limited (now known as TechNova Imaging Systems Limited) had also filed a petition before the Court for amalgamating Image Printmakers Pvt. Ltd. with the appellant company.
The assessment for the assessment year 1992-93 was completed under Section 143(3) of the Act vide order dated 28/02/1995 determining total income at Rs.1,00,47,223/-. The Assessing Officer however inter alia restricted the depreciation allowance under Section 32 of the IT Act Rs.43,77,239/- as against the claim at of Rs.81,26,400/- made by the appellant. The Assessing Officer calculated the depreciation allowance on the basis of the written down value of the assets in the books of amalgamating (transferor) companies ignoring the unabsorbed depreciation, that is, depreciation which was not actually allowed.
The court held that the Tribunal erred in holding that because the assessee had not obtained approval of the Central Government required under Section 72A, the order passed by the Commissioner of Income-tax (Appeals), impugned before the Tribunal calls for interference. The Commissioner of Income-tax (Appeals) had in paragraph 9.8 held that the unabsorbed depreciation of the amalgamating companies should be added to the written down value of the block of assets of the amalgamated company with which we are in agreement with.
Case Details
Case Title: Technova Imaging Systems Limited Versus Deputy Commissioner of Income Tax Sepcial Range – 47, Mumbai
Case No.: INCOMETAXAPPEALNO. 405 OF2003
Date: 09th APRIL, 2025
Counsel For Petitioner: Pankaj Toprani
Counsel For Respondent: Suresh Kumar
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