J U D G M E N T

(Judgment of the court was delivered by R.MAHADEVAN, J.)

This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 08.06.2009 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in I.T.A.No.2159/Mds/2008, relating to the assessment year 2004-05.

2.By order dated 22.03.2010, this court admitted the aforesaid tax case appeal on the following substantial question of law:

“Whether the claim of carry forward losses under Section 72A of the Act, ought to have been allowed, where necessary conditions have not been satisfied?”

3.When the matter was taken up for consideration, the learned counsel appearing for the appellant, referring to the judgement dated 13.02.2019 passed by a Division Bench of this court in T.C.A. No. 747 of 2009 in respect of the assessee's own case relating to the assessment year 2004-05, submitted that the identical question of law was raised in that case and the same was decided in favour of the assessee and against the Revenue.

The relevant passage of the said judgment is profitably, extracted below:

“12. The SICA is a special enactment, the purpose of which is rehabilitation and revival of sick industries. The provisions of section

32(2) thereof read as under:

'32. Effect of the Act on other laws.? -

(1).......

(2)Where there has been under any scheme under this Act an amalgamation of a sick industrial company with another company, the provisions of Section 72-A of the Income Tax Act, 1961 (43 of 1961), shall, subject to the modifications that the power of the Central Government under that section may be exercised by the Board without any recommendation, by the specified authority referred to in that section, apply in relation to such amalgamation as they apply in relation to the amalgamation of a company owning an industrial undertaking with another company.'

13. The provisions of Section 32(2) of the SICA as well as

72A of the Act and the interplay thereof came to be considered by the Supreme Court in the case of Indian Shaving Products Ltd (supra). The Bench was considering an appeal against an order of the Appellate Authority for Industrial and Financial Reconstruction upholding an order of the BIFR refusing to grant the benefit of the provisions of Section 71 (a) of the Income Tax Act to the appellant upon amalgamation and sanction of a scheme by the BIFR.

14. After noting that that BIFR had been enacted in public interest, with a view to secure timely detection of sick and potentially sick companies owning industrial undertakings and to determine preventive, ameliorative, remedial and other measures required to be taken with respect to such companies, the Bench considered the various provisions of the SICA, in specific Section 32(2).

15. Reference is made to the judgement of the Supreme Court in the case of Commissioner of Income Tax and others vs. Mahindra and Mahindra and Others (144 ITR 225) that considered a challenge to Section 72 A. The following paragraph from the judgement in Mahindra's case has been particularly noted and extracted:

'Before undertaking a scrutiny of these reasons for ultimately deciding whether the impugned conclusion of the Specified Authority and the Central Government is liable to be interfered with or not it will be useful to indicate briefly the object with which this new provision of s. 72A was introduced in the Act as it will throw light on what was the mischief or situation that was intended to be remedied by its introduction as also the true concept of financial Don- viability. From the budget speech of the Finance Minister, the Notes on Clauses of the Finance Bill (No. 2) of 1977 and the Memorandum explaining to provisions of the said Bill it will appear clear that sickness among industrial undertaking was regarded as a matter of grave national concern inasmuch as closure of any sizable manufacturing unit in any industry entailed social costs in terms of loss of production and unemployment as also waste of valuable capi