IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 21.02.2022

CORAM

THE HONOURABLE MR.JUSTICE R.MAHADEVAN

and

THE HONOURABLE MR. JUSTICE J.SATHYA NARAYANA PRASAD

T.C.A.No.254 of 2010

The Commissioner of Income Tax II,

Coimbatore.

.. Appellant / Appellant

Vs.

M/s.Lakshmi Machine Works Ltd.,

SRKV Post, Perianaickenpalayam,

Coimbatore 641 020.

PAN AAACL5244N

.. Respondent / Respondent

Tax Case Appeal filed under Section 260A of the Income Tax

Act, 1961 against the order of the Income Tax Appellate Tribunal

'D' Bench, Chennai dated 08.06.2009 in ITA No.2159/Mds/2008 for

the assessment year 2004-05 preferred against the order of the

Commissioner of Income Tax (Appeals)-I in ITA.No.88/08-09 dated

11.09.2008 filed against the Assessment order of the Assistant

Commissioner of Income Tax, Company Circle – IV(2), Coimbatore

dated 08.07.2008 for the Assessment Year 2004-05.

For Appellant

:

Mr.M.Swaminathan

Senior Standing Counsel

Mrs.K.G.Usharani

Junior Standing Counsel

For Respondent :

No appearance

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.

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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.

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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