Full Judgment Text
REPORTABLE
2026 INSC 359
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7796 OF 2012
ASPINWALL AND CO. LTD. … Appellant (s)
VERSUS
INSPECTING ASSISTANT COMMISSIONER … Respondent(s)
WITH
CIVIL APPEAL NO. 6617 OF 2019
CIVIL APPEAL NO. 13454 OF 2015
CIVIL APPEAL NO. 13455 OF 2015
CIVIL APPEAL NO.19865 OF 2017
J U D G M E N T
Rajesh Bindal, J.
1. This order will dispose of five appeals.
Signature Not Verified
Digitally signed by
ANITA MALHOTRA
Date: 2026.04.13
17:37:49 IST
Reason:
Page 1 of 19
FACTS OF THE CASES
2. In Civil Appeal No.7796 of 2012 challenge is to the order dated
1
23.09.2011 passed by the High Court in OTC No.3 of 2011 whereby
order dated 22.03.2011 passed in AITA Nos.2/2010 by the Kerala
2
Agricultural Income Tax and Sales Tax Appellate Tribunal , Addl. Bench,
Ernakulam, was upheld.
2.1 In Civil Appeal No.19865 of 2017 challenge is to the order
dated 27.07.2017 passed by the High Court in OTC No.11 of 2013
wherein order dated 30.11.2012 passed in AITA No.1/2011 by the
Tribunal, was upheld.
2.2 In Civil Appeal No.13454 of 2015 challenge is to the order
dated 27.07.2015 passed by the High Court in OTC No.1 of 2015 wherein
order dated 19.02.2015 passed in AITA Nos.2 & 3 /2012 by the Tribunal,
was upheld.
2.3 In Civil Appeal No.13455 of 2015 challenge is to the order
dated 27.07.2015 passed by the High Court in OTC No.2 of 2015 wherein
order dated 19.02.2015 passed in AITA Nos. 2 & 3/2012 by the Tribunal,
was upheld.
2.4 In Civil Appeal No.6617 of 2019 challenge is to the order dated
24.05.2019 passed by the High Court in OTC No.1 of 2019 wherein order
1
High Court of Kerala at Ernakulam
2
Hereinafter referred to ‘Tribunal’
Page 2 of 19
dated 30.08.2018 passed in AITA Nos.2-4/2016 by the Tribunal, was
upheld.
3. All the appeals are being taken up together, as common
questions of fact and law are involved in these appeals. Facts are being
noticed from Civil Appeal No.7796 of 2012.
3
4. A company named ‘Pullangode Rubber & Produce Co. Ltd.
4
was amalgamated with the appellant company . The scheme of
amalgamation was sanctioned in November 2006. The appointed date
was fixed as 01.01.2006. As there were accumulated losses in the
balance sheet of amalgamating company, the issue is, as to whether the
same could be claimed as a set-off against the income of the
amalgamated company.
5. The argument raised by Mr. S. Ganesh, learned senior
counsel for the appellant is that in terms of the provisions of Section 54 of
5
the Kerala Agricultural Income Tax Act, 1991 , the amalgamated company
as successor of the amalgamating company shall be entitled to set-off of
the losses suffered. In terms of Section 12 of the Kerala Act, the losses
suffered by an assessee can be carried forward for a period of 8 years for
set-off against the income of subsequent years. Relying upon the
3
Hereinafter referred to ‘amalgamating company’
4
Hereinafter referred to ‘amalgamated company’
5
Hereinafter referred to ‘the Kerala Act’
Page 3 of 19
judgment of this Court in Dalmia Power Ltd. and Another v. Assistant
6
Commissioner of Income-Tax , it was submitted that once the scheme
of amalgamation is approved, all the clauses contained therein stand
approved. The rights of the parties flow therefrom. In the aforesaid
judgment, no objection was raised by the Income Tax Department to
various clauses of the scheme. Hence, the same were held to be binding.
In the case in hand as well, no objection was raised to the scheme of
amalgamation. Clause 14(2) thereof clearly provides for set-off of losses
incurred by amalgamating company against the profits of the
amalgamated company. The findings recorded by the High Court in the
impugned order are erroneous and are totally contrary to the law laid down
in Dalmia Power Ltd.’s case (supra). In fact, the judgment of the High
Court was delivered prior to the judgment of this Court in the aforesaid
case. The prayer is for setting aside the judgment of the High Court and
allowing the appellant’s claim for setting off accumulated losses of the
amalgamating company with the profits of the amalgamated company.
6. In response, Mr. Pallav Shishodia, learned senior counsel
appearing for the respondent submitted that reliance on the judgment of
this Court in Dalmia Power Ltd.’s case (supra) is totally misplaced. The
core argument raised by the appellant, is that once the scheme of
6
2019 INSC 1410 : ( 2020 ) 420 ITR 339
Page 4 of 19
amalgamation has been approved with no objection raised by the
respondents therein, the terms and conditions contained therein have to
be given full effect thereto. It was submitted that in the aforesaid case ,
this Court has specifically noticed that despite notice, the Income Tax
Department had not raised any objection to any of the terms contained in
the scheme of amalgamation whereas in the case in hand, State of Kerala
was never issued noticed during the process of amalgamation.
6.1 It was further submitted that in terms of provisions of the
Section 12 of Kerala Act, set-off of accumulated losses can be claimed
only by the assessee who suffered the losses. As the
appellant/amalgamated company had not suffered those losses, no set-
off can be claimed. In any case, in Dalmia Power Ltd.’s case (supra) ,
the only issue was regarding filing of returns which was allowed. The
issue on merit regarding entitlement of the relief was not gone into. Even
as per the conditions laid down in the scheme of amalgamation, especially
Clause 17.1, the amalgamating company stands dissolved without
winding up. Meaning thereby, the assessee under the Kerala Act, who
had suffered the losses, is no longer in existence to claim any set-off.
6.2 Mr. Pallav Shishodia, learned senior counsel for the
respondent further submitted that the language of Section 72A of the
Page 5 of 19
7
Income Tax Act, 1961 is altogether different when compared with the
provisions of the Kerala Act. Section 2(7) of the Kerala Act defines an
assessee. Section 2(20) defines a person whereas Section 3 thereof is
the charging section. Section 12 thereof deals with carry forward of
losses, whereas Section 48 deals with legal representatives of a person
who dies. Section 54, which talks about succession of a business, also
does not come to the rescue of the appellant as nothing contained therein
provides that amalgamated company/appellant can claim set-off of the
losses suffered by amalgamating company. Proviso to the aforesaid
section provides that if there is any existing tax demand against the
amalgamating company, the same can always be recovered from
successor, namely, the amalgamated company, but no other benefit
accrues. Sections 57 to 59 of the Kerala Act deal with the assessment of
a person transferring property, assessment in case of discontinued
business of a company, firm or association and assessment of the
firm/association which has been dissolved or has discontinued its
business. Section 60 of the Kerala Act deals with a case where a
company is in liquidation.
6.3 As the amalgamating company has ceased to exist, the
appellant cannot claim any set-off of the losses suffered by it. In support
7
Hereinafter referred to ‘the 1961 Act’
Page 6 of 19
of the arguments, reliance was placed upon the judgment of this Court in
8
General Radio & Appliances Co. Ltd. v. M.A. Khader, Saraswati
9
Industrial Syndicate Ltd. v. CIT , Singer India Limited v. Chander
10 11
Mohan Chadha and Others, CIT v. Maruti Suzuki (India) Ltd. , and
12
.
Religare Finvest Ltd. v. State (NCT of Delhi)
6.4 He further referred to the impugned order dated 23.09.2011
passed by the High Court where a specific finding has been recorded that
the losses for which the set-off is sought to be claimed by the
appellant/amalgamated company pertains to a period beyond 8 years,
which otherwise also is not permissible in terms of Section 12 of the Kerala
Act.
7. Heard learned counsel for the parties and perused the
relevant referred record.
8. The provisions of the Kerala Act which are relevant for
consideration of the arguments raised by learned counsel for the parties
are extracted below:
“
Section 2. Definitions. – In this Act unless the context
,
otherwise requires
8
1986 INSC 85 : (1986) 2 SCC 656
9
1990 INSC 266 : 1990 Supp SCC 675
10
2004 INSC 447 : (2004) 7 SCC 1
11
2019 INSC 815 : (2020) 18 SCC 331
12
2023 INSC 819 : (2024) 1 SCC 797
Page 7 of 19
x x x
(7) “assessee” means a person by whom any tax
or any other sum of money is payable under this Act,
and includes:
(i) every person in respect of whom any proceeding
under this Act has been taken for the
assessment of his income or of the income of
any other person in respect of which he is
assessable, or of the loss sustained by him or by
such other person; or of the amount of refund
due to him or to such other person;
(ii) every person who owns or possesses any land
in which any crop is grown, the agricultural
income of which is liable to tax under the
provisions of this Act either on his own account
or on account of others;
(iii) every person who is deemed to be an assessee
under any provision of this Act;
(iv) every person who is deemed to be an assessee
in default under any provision of this Act;
(20) “person” means any individual or association
of individuals owning, possessing or holding property
for himself or for any other, or partly for his own benefit
and partly for another, either as owner, possessor,
trustee, receiver, common manager, administrator or
executor or any capacity and includes a firm or a
company, an association of individuals, whether
Page 8 of 19
incorporated or not, and any institution capable of
holding property;
x x x
Section 3. Charge of agricultural income tax. - (1) Tax at
the rate or rates specified in the Schedule to this Act shall
be charged for each assessment year in accordance with
and subject to the provisions of this Act, on the total
agricultural income of the previous year of every person.
Provided that no tax shall be charged on any person other
than a company registered under the Companies Act, 1956
st
(Central Act 1 of 1956) with effect from 1 April, 2013.
x x x
Section 12. Carrying forward of loss. –
Where any person sustains a loss as a result of computation
of agricultural income any year, the loss shall be carried
forward to the following year and set off against the
agricultural income of that year and if it cannot be wholly set
off, the amount of loss not so set off, shall be carried forward
to the following year and so on, but no loss shall be carried
forward for more than eight years.
x x x
. -
Section 48 Legal Representative:
(1) Where a person dies, his legal representative shall
be liable to pay any sum which the deceased would
have been liable to pay under this Act if he had not
Page 9 of 19
died, in the like manner and to the same extent as
the deceased.
(2) For the purpose of making an assessment
(including an assessment, re-assessment or
recomputation under chapter VII), of the agricultural
income of the deceased and for the purpose of
levying any sum at the hands of the legal
representative in accordance with the provisions of
sub-section (1)
(a) any proceeding taken against the deceased
before his death shall be deemed to have
been taken against the legal representative
and may be continued against the legal
representative from the stage at which it stood
on the date of death of the deceased;
(b) any proceeding which could have been taken
against the deceased if he had survived, may
be taken against the legal representative; and
(c) all the provisions of this Act shall apply
accordingly,
(3) The legal representative of the deceased shall for
the purposes of this Act, be deemed to be an
assessee.
(4) Every legal representative shall be personally liable
for any tax payable by him in his capacity as legal
representative, if, while his liability for tax remains
undercharged, he creates a charge on or disposes
of or parts with any assets of the estate of the
Page 10 of 19
deceased, which are in, or may come into, his
possession, but such liability shall be limited to the
value of the asset so charged, disposed of or parted
with in respect of these assets.
(5) The liability of a legal representative under this
section shall, subject to the provisions of sub-
section (4) be limited to the extent to which the
assets of the deceased is capable of meeting the
liability.
x x x
Section 54 . Succession to business:-
Where a person carrying on any business in the course of
which agricultural income is received, has been succeeded
in such capacity by another person, such person and such
other person, shall each be assessed in respect of his actual
share of the agricultural income of the previous year:
Provided that when the persons succeeded in the business
cannot be found, the assessment of the agricultural income
or the year in which the succession took place upto the date
of succession, and for the years preceding that year shall be
made on the person succeeding him, in like manner and to
the same extent, as it would have been made on the person
succeeded or when the tax in respect of the assessment
made for such years assessed on the person succeeded
cannot be recovered from him, it shall be payable by and
recoverable from the person succeeding and such person
Page 11 of 19
shall be entitled to recover from the person succeeded the,
amount of any tax so paid.
AND
Income Tax Act, 1961
“Section 72A. Provisions relating to carry forward and
set off of accumulated loss and unabsorbed
depreciation allowance in amalgamation or demerger,
etc.
(1) Where there has been an amalgamation of—
(a) a company owning an industrial
undertaking or a ship or a hotel with another
company; or
(b) a banking company referred to in clause
(c) of section 5 of the Banking Regulation Act, 1949
(10 of 1949) with a specified bank; or
(c) one or more public sector company or
companies with one or more public sector
company or companies; or
(d) an erstwhile public sector company with
one or more company or companies, if the share
purchase agreement entered into under strategic
disinvestment restricted immediate amalgamation
of the said public sector company and the
amalgamation is carried out within five years from
the end of the previous year in which the restriction
Page 12 of 19
on amalgamation in the share purchase agreement
ends,]then, notwithstanding anything contained in
any other provision of this Act, the accumulated
loss and the unabsorbed depreciation of the
amalgamating company shall be deemed to be the
loss or, as the case may be, allowance for
unabsorbed depreciation of the amalgamated
company for the previous year in which the
amalgamation was effected, and other provisions
of this Act relating to set off and carry forward of
loss and allowance for depreciation shall apply
accordingly:
Provided that the accumulated loss and the
unabsorbed depreciation of the amalgamating
company, in case of an amalgamation referred to
in clause (d), which is deemed to be the loss or, as
the case may be, the allowance for unabsorbed
depreciation of the amalgamated company, shall
not be more than the accumulated loss and
unabsorbed depreciation of the public sector
company as on the date on which the public sector
company ceases to be a public sector company as
a result of strategic disinvestment.
Explanation.—For the purposes of clause (d),—
(i)
"control" shall have the same meaning as
assigned to in clause (27) of section 2 of the
Companies Act, 2013 (18 of 2013);
Page 13 of 19
(ii)
"erstwhile public sector company" means a
company which was a public sector company in
earlier previous years and ceases to be a public
sector company by way of strategic disinvestment
by the Government;
(iii)
"strategic disinvestment" means sale of
shareholding by the Central Government or any
State Government in a public sector company
which results in reduction of its shareholding to
below fifty-one per cent along with transfer of
control to the buyer.”
9. From a perusal of the aforesaid provisions it is evident that
Section 2(7) defines an assessee to mean a person liable to pay tax under
the Kerala Act. Section 2(20) defines a person to mean an individual etc.
owning, possessing or holding property which includes a corporate as
well. Section 3 of the Kerala Act, which is the charging Section, provides
for charging of tax as per the rates prescribed in the aforesaid Act on the
agricultural income. Section 12 of the Kerala Act enables any person to
carry forward any loss sustained in any year for set-off against the income
of subsequent years. Such loss can be carried forward for a maximum
period of 8 years. Section 48 of the Kerala Act provides that in case, a
person dies, his legal representatives shall be liable to pay tax, which the
deceased would have been liable to pay under the aforesaid Act, if he had
not died. Any proceedings for the purpose can be against the legal heirs
Page 14 of 19
of such deceased person, who shall be deemed to be an assessee under
the aforesaid Act.
9.1 Section 54 of the Kerala Act deals with succession to
business. It provides that where a person carrying on any business has
been succeeded in such capacity by another person, such person and
such other person shall each be assessed in respect of their actual share
of agricultural income in the previous year. Proviso to the aforesaid
section provides that in case a person who succeeded cannot be found,
action can be taken against a person who is succeeding such person. The
succeeding person is liable to pay tax, if any, due from the succeeded
person.
9.2 Section 60 of the Kerala Act deals with the status of a
company in liquidation. In terms thereof, a liquidator of a company, being
wound up under order of the court or otherwise, has to issue notice to the
Agricultural Income Tax Officer, who in turn has to specify to him, the
amount of tax due under the aforesaid Act.
9.3 Section 72A of the 1961 Act deals with carry forward and set
off of accumulated losses and unabsorbed depreciation allowance in the
cases of amalgamation or demerger. The provision, starting with a non-
obstante clause, clearly provides that accumulated losses and
unabsorbed depreciation of the amalgamating company shall be deemed
Page 15 of 19
to be loss or as the case may be, allowance for unabsorbed depreciation
of the amalgamated company for the previous year in which
amalgamation was effected.
10. Learned counsel for the appellant has placed heavy reliance
upon Clause 14.2 of the scheme of amalgamation. The same is extracted
below:
“Clause 14.2. With effect from the Appointed Date, all the
profits or Income accruing or arising to PRPL or expenditure
or losses arising or incurred by PRPL shall, for all purposes,
be treated as and shall deemed to accrue as the profits or
income or expenditure or losses, as the case may be, of
Aspinwall & Co."
11. The fact which was not disputed by learned senior counsel for
the appellant at the time of hearing is that no notice of amalgamation
proceedings was issued to the State of Kerala to raise objection with
reference to any terms referred to with the amalgamation scheme.
13
12. Section 394-A of the Companies Act, 1956 makes it
mandatory on the Tribunal to issue notice in every application filed under
Sections 391 or 394 to the Central Government and any objections raised
13
Hereinafter referred to as ‘1956 Act’
Page 16 of 19
are to be considered. Section 394 of the aforesaid Act talks about
amalgamation of the companies. The Ministry of Corporate Affairs,
Government of India, had issued a Circular dated 15.01.2014 bearing
F.No.2/1/2014 providing that while responding to the notices issued to the
Government under Section 394-A, the Regional Director shall invite
specific comments from the Income Tax Department within 15 days. If no
response is received from the Income Tax Department during the
aforesaid period, it may be presumed that the Income Tax Department
has no objection to the action proposed under Section 391 or 394, as the
case may be. It is in the light of the aforesaid provision and the circular
that the comments of the Income Tax Department are mandatory. The
judgment of this Court in Dalmia Power Ltd.’s case (supra) is dealing
with a case under the Companies Act, 2013 where similar provision is
contained in Section 230(5) specifically and in Rule 8(3) of the Companies
(Compromises, Arrangements and Amalgamations) Rules, 2016. There
is a specific finding recorded in the aforesaid judgment that despite notice,
Income Tax Department did not raise any objection, within the stipulated
time, to the scheme, as proposed. The same was approved. As the
scheme was approved, all terms and conditions contained therein stood
approved and could be acted upon.
Page 17 of 19
13. The facts in the present case are distinguishable. Neither
there is any statutory requirement for issuing notice to the State
Government before any scheme of amalgamation is approved by the
Court under the 1956 Act nor such notice was issued. Hence, to state
that the judgment in covers the case
Dalmia Power Ltd.’s case (supra)
of the appellant, is misconceived and deserves to be rejected. Ordered
accordingly.
14. Learned counsel for the appellant has not been able to refer
to any provision under the Kerala Act in terms of which the losses suffered
by amalgamating company can be set-off against the income of the
amalgamated company. His main reliance was only on the Clause 14.2
in the scheme of amalgamation. The argument addressed with reference
thereto has already been dealt with in the previous paragraphs and
rejected.
15. There is another finding on facts recorded by the High Court
in the impugned order dated 23.09.2011 dealing with the Assessment
Year 2006-07, i.e. that the loss of the amalgamating company/Pullangode
Rubber & Produce Co. Ltd. pertained to a period beyond 8 years.
Assessment years in all other appeals are subsequent to that. Hence, in
terms of Section 12 of the Kerala Act the appellant/Aspinwall and Co. Ltd.
will not be entitled to any set-off. It is a case wherein the appellant had
Page 18 of 19
lost in all fora. To challenge the aforesaid findings of fact recorded by the
High Court in the impugned order, no specific ground has been raised in
the petitions filed before this Court.
16. For the reasons mentioned above, we do not find any merit in
the present appeals. The same are accordingly dismissed. There shall
not be any order as to costs.
17. Pending application(s), if any, shall also stand disposed of.
……………….……………..J.
(RAJESH BINDAL)
……………….……………..J.
(VIJAY BISHNOI)
New Delhi;
April 13, 2026.
Page 19 of 19
2026 INSC 359
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7796 OF 2012
ASPINWALL AND CO. LTD. … Appellant (s)
VERSUS
INSPECTING ASSISTANT COMMISSIONER … Respondent(s)
WITH
CIVIL APPEAL NO. 6617 OF 2019
CIVIL APPEAL NO. 13454 OF 2015
CIVIL APPEAL NO. 13455 OF 2015
CIVIL APPEAL NO.19865 OF 2017
J U D G M E N T
Rajesh Bindal, J.
1. This order will dispose of five appeals.
Signature Not Verified
Digitally signed by
ANITA MALHOTRA
Date: 2026.04.13
17:37:49 IST
Reason:
Page 1 of 19
FACTS OF THE CASES
2. In Civil Appeal No.7796 of 2012 challenge is to the order dated
1
23.09.2011 passed by the High Court in OTC No.3 of 2011 whereby
order dated 22.03.2011 passed in AITA Nos.2/2010 by the Kerala
2
Agricultural Income Tax and Sales Tax Appellate Tribunal , Addl. Bench,
Ernakulam, was upheld.
2.1 In Civil Appeal No.19865 of 2017 challenge is to the order
dated 27.07.2017 passed by the High Court in OTC No.11 of 2013
wherein order dated 30.11.2012 passed in AITA No.1/2011 by the
Tribunal, was upheld.
2.2 In Civil Appeal No.13454 of 2015 challenge is to the order
dated 27.07.2015 passed by the High Court in OTC No.1 of 2015 wherein
order dated 19.02.2015 passed in AITA Nos.2 & 3 /2012 by the Tribunal,
was upheld.
2.3 In Civil Appeal No.13455 of 2015 challenge is to the order
dated 27.07.2015 passed by the High Court in OTC No.2 of 2015 wherein
order dated 19.02.2015 passed in AITA Nos. 2 & 3/2012 by the Tribunal,
was upheld.
2.4 In Civil Appeal No.6617 of 2019 challenge is to the order dated
24.05.2019 passed by the High Court in OTC No.1 of 2019 wherein order
1
High Court of Kerala at Ernakulam
2
Hereinafter referred to ‘Tribunal’
Page 2 of 19
dated 30.08.2018 passed in AITA Nos.2-4/2016 by the Tribunal, was
upheld.
3. All the appeals are being taken up together, as common
questions of fact and law are involved in these appeals. Facts are being
noticed from Civil Appeal No.7796 of 2012.
3
4. A company named ‘Pullangode Rubber & Produce Co. Ltd.
4
was amalgamated with the appellant company . The scheme of
amalgamation was sanctioned in November 2006. The appointed date
was fixed as 01.01.2006. As there were accumulated losses in the
balance sheet of amalgamating company, the issue is, as to whether the
same could be claimed as a set-off against the income of the
amalgamated company.
5. The argument raised by Mr. S. Ganesh, learned senior
counsel for the appellant is that in terms of the provisions of Section 54 of
5
the Kerala Agricultural Income Tax Act, 1991 , the amalgamated company
as successor of the amalgamating company shall be entitled to set-off of
the losses suffered. In terms of Section 12 of the Kerala Act, the losses
suffered by an assessee can be carried forward for a period of 8 years for
set-off against the income of subsequent years. Relying upon the
3
Hereinafter referred to ‘amalgamating company’
4
Hereinafter referred to ‘amalgamated company’
5
Hereinafter referred to ‘the Kerala Act’
Page 3 of 19
judgment of this Court in Dalmia Power Ltd. and Another v. Assistant
6
Commissioner of Income-Tax , it was submitted that once the scheme
of amalgamation is approved, all the clauses contained therein stand
approved. The rights of the parties flow therefrom. In the aforesaid
judgment, no objection was raised by the Income Tax Department to
various clauses of the scheme. Hence, the same were held to be binding.
In the case in hand as well, no objection was raised to the scheme of
amalgamation. Clause 14(2) thereof clearly provides for set-off of losses
incurred by amalgamating company against the profits of the
amalgamated company. The findings recorded by the High Court in the
impugned order are erroneous and are totally contrary to the law laid down
in Dalmia Power Ltd.’s case (supra). In fact, the judgment of the High
Court was delivered prior to the judgment of this Court in the aforesaid
case. The prayer is for setting aside the judgment of the High Court and
allowing the appellant’s claim for setting off accumulated losses of the
amalgamating company with the profits of the amalgamated company.
6. In response, Mr. Pallav Shishodia, learned senior counsel
appearing for the respondent submitted that reliance on the judgment of
this Court in Dalmia Power Ltd.’s case (supra) is totally misplaced. The
core argument raised by the appellant, is that once the scheme of
6
2019 INSC 1410 : ( 2020 ) 420 ITR 339
Page 4 of 19
amalgamation has been approved with no objection raised by the
respondents therein, the terms and conditions contained therein have to
be given full effect thereto. It was submitted that in the aforesaid case ,
this Court has specifically noticed that despite notice, the Income Tax
Department had not raised any objection to any of the terms contained in
the scheme of amalgamation whereas in the case in hand, State of Kerala
was never issued noticed during the process of amalgamation.
6.1 It was further submitted that in terms of provisions of the
Section 12 of Kerala Act, set-off of accumulated losses can be claimed
only by the assessee who suffered the losses. As the
appellant/amalgamated company had not suffered those losses, no set-
off can be claimed. In any case, in Dalmia Power Ltd.’s case (supra) ,
the only issue was regarding filing of returns which was allowed. The
issue on merit regarding entitlement of the relief was not gone into. Even
as per the conditions laid down in the scheme of amalgamation, especially
Clause 17.1, the amalgamating company stands dissolved without
winding up. Meaning thereby, the assessee under the Kerala Act, who
had suffered the losses, is no longer in existence to claim any set-off.
6.2 Mr. Pallav Shishodia, learned senior counsel for the
respondent further submitted that the language of Section 72A of the
Page 5 of 19
7
Income Tax Act, 1961 is altogether different when compared with the
provisions of the Kerala Act. Section 2(7) of the Kerala Act defines an
assessee. Section 2(20) defines a person whereas Section 3 thereof is
the charging section. Section 12 thereof deals with carry forward of
losses, whereas Section 48 deals with legal representatives of a person
who dies. Section 54, which talks about succession of a business, also
does not come to the rescue of the appellant as nothing contained therein
provides that amalgamated company/appellant can claim set-off of the
losses suffered by amalgamating company. Proviso to the aforesaid
section provides that if there is any existing tax demand against the
amalgamating company, the same can always be recovered from
successor, namely, the amalgamated company, but no other benefit
accrues. Sections 57 to 59 of the Kerala Act deal with the assessment of
a person transferring property, assessment in case of discontinued
business of a company, firm or association and assessment of the
firm/association which has been dissolved or has discontinued its
business. Section 60 of the Kerala Act deals with a case where a
company is in liquidation.
6.3 As the amalgamating company has ceased to exist, the
appellant cannot claim any set-off of the losses suffered by it. In support
7
Hereinafter referred to ‘the 1961 Act’
Page 6 of 19
of the arguments, reliance was placed upon the judgment of this Court in
8
General Radio & Appliances Co. Ltd. v. M.A. Khader, Saraswati
9
Industrial Syndicate Ltd. v. CIT , Singer India Limited v. Chander
10 11
Mohan Chadha and Others, CIT v. Maruti Suzuki (India) Ltd. , and
12
.
Religare Finvest Ltd. v. State (NCT of Delhi)
6.4 He further referred to the impugned order dated 23.09.2011
passed by the High Court where a specific finding has been recorded that
the losses for which the set-off is sought to be claimed by the
appellant/amalgamated company pertains to a period beyond 8 years,
which otherwise also is not permissible in terms of Section 12 of the Kerala
Act.
7. Heard learned counsel for the parties and perused the
relevant referred record.
8. The provisions of the Kerala Act which are relevant for
consideration of the arguments raised by learned counsel for the parties
are extracted below:
“
Section 2. Definitions. – In this Act unless the context
,
otherwise requires
8
1986 INSC 85 : (1986) 2 SCC 656
9
1990 INSC 266 : 1990 Supp SCC 675
10
2004 INSC 447 : (2004) 7 SCC 1
11
2019 INSC 815 : (2020) 18 SCC 331
12
2023 INSC 819 : (2024) 1 SCC 797
Page 7 of 19
x x x
(7) “assessee” means a person by whom any tax
or any other sum of money is payable under this Act,
and includes:
(i) every person in respect of whom any proceeding
under this Act has been taken for the
assessment of his income or of the income of
any other person in respect of which he is
assessable, or of the loss sustained by him or by
such other person; or of the amount of refund
due to him or to such other person;
(ii) every person who owns or possesses any land
in which any crop is grown, the agricultural
income of which is liable to tax under the
provisions of this Act either on his own account
or on account of others;
(iii) every person who is deemed to be an assessee
under any provision of this Act;
(iv) every person who is deemed to be an assessee
in default under any provision of this Act;
(20) “person” means any individual or association
of individuals owning, possessing or holding property
for himself or for any other, or partly for his own benefit
and partly for another, either as owner, possessor,
trustee, receiver, common manager, administrator or
executor or any capacity and includes a firm or a
company, an association of individuals, whether
Page 8 of 19
incorporated or not, and any institution capable of
holding property;
x x x
Section 3. Charge of agricultural income tax. - (1) Tax at
the rate or rates specified in the Schedule to this Act shall
be charged for each assessment year in accordance with
and subject to the provisions of this Act, on the total
agricultural income of the previous year of every person.
Provided that no tax shall be charged on any person other
than a company registered under the Companies Act, 1956
st
(Central Act 1 of 1956) with effect from 1 April, 2013.
x x x
Section 12. Carrying forward of loss. –
Where any person sustains a loss as a result of computation
of agricultural income any year, the loss shall be carried
forward to the following year and set off against the
agricultural income of that year and if it cannot be wholly set
off, the amount of loss not so set off, shall be carried forward
to the following year and so on, but no loss shall be carried
forward for more than eight years.
x x x
. -
Section 48 Legal Representative:
(1) Where a person dies, his legal representative shall
be liable to pay any sum which the deceased would
have been liable to pay under this Act if he had not
Page 9 of 19
died, in the like manner and to the same extent as
the deceased.
(2) For the purpose of making an assessment
(including an assessment, re-assessment or
recomputation under chapter VII), of the agricultural
income of the deceased and for the purpose of
levying any sum at the hands of the legal
representative in accordance with the provisions of
sub-section (1)
(a) any proceeding taken against the deceased
before his death shall be deemed to have
been taken against the legal representative
and may be continued against the legal
representative from the stage at which it stood
on the date of death of the deceased;
(b) any proceeding which could have been taken
against the deceased if he had survived, may
be taken against the legal representative; and
(c) all the provisions of this Act shall apply
accordingly,
(3) The legal representative of the deceased shall for
the purposes of this Act, be deemed to be an
assessee.
(4) Every legal representative shall be personally liable
for any tax payable by him in his capacity as legal
representative, if, while his liability for tax remains
undercharged, he creates a charge on or disposes
of or parts with any assets of the estate of the
Page 10 of 19
deceased, which are in, or may come into, his
possession, but such liability shall be limited to the
value of the asset so charged, disposed of or parted
with in respect of these assets.
(5) The liability of a legal representative under this
section shall, subject to the provisions of sub-
section (4) be limited to the extent to which the
assets of the deceased is capable of meeting the
liability.
x x x
Section 54 . Succession to business:-
Where a person carrying on any business in the course of
which agricultural income is received, has been succeeded
in such capacity by another person, such person and such
other person, shall each be assessed in respect of his actual
share of the agricultural income of the previous year:
Provided that when the persons succeeded in the business
cannot be found, the assessment of the agricultural income
or the year in which the succession took place upto the date
of succession, and for the years preceding that year shall be
made on the person succeeding him, in like manner and to
the same extent, as it would have been made on the person
succeeded or when the tax in respect of the assessment
made for such years assessed on the person succeeded
cannot be recovered from him, it shall be payable by and
recoverable from the person succeeding and such person
Page 11 of 19
shall be entitled to recover from the person succeeded the,
amount of any tax so paid.
AND
Income Tax Act, 1961
“Section 72A. Provisions relating to carry forward and
set off of accumulated loss and unabsorbed
depreciation allowance in amalgamation or demerger,
etc.
(1) Where there has been an amalgamation of—
(a) a company owning an industrial
undertaking or a ship or a hotel with another
company; or
(b) a banking company referred to in clause
(c) of section 5 of the Banking Regulation Act, 1949
(10 of 1949) with a specified bank; or
(c) one or more public sector company or
companies with one or more public sector
company or companies; or
(d) an erstwhile public sector company with
one or more company or companies, if the share
purchase agreement entered into under strategic
disinvestment restricted immediate amalgamation
of the said public sector company and the
amalgamation is carried out within five years from
the end of the previous year in which the restriction
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on amalgamation in the share purchase agreement
ends,]then, notwithstanding anything contained in
any other provision of this Act, the accumulated
loss and the unabsorbed depreciation of the
amalgamating company shall be deemed to be the
loss or, as the case may be, allowance for
unabsorbed depreciation of the amalgamated
company for the previous year in which the
amalgamation was effected, and other provisions
of this Act relating to set off and carry forward of
loss and allowance for depreciation shall apply
accordingly:
Provided that the accumulated loss and the
unabsorbed depreciation of the amalgamating
company, in case of an amalgamation referred to
in clause (d), which is deemed to be the loss or, as
the case may be, the allowance for unabsorbed
depreciation of the amalgamated company, shall
not be more than the accumulated loss and
unabsorbed depreciation of the public sector
company as on the date on which the public sector
company ceases to be a public sector company as
a result of strategic disinvestment.
Explanation.—For the purposes of clause (d),—
(i)
"control" shall have the same meaning as
assigned to in clause (27) of section 2 of the
Companies Act, 2013 (18 of 2013);
Page 13 of 19
(ii)
"erstwhile public sector company" means a
company which was a public sector company in
earlier previous years and ceases to be a public
sector company by way of strategic disinvestment
by the Government;
(iii)
"strategic disinvestment" means sale of
shareholding by the Central Government or any
State Government in a public sector company
which results in reduction of its shareholding to
below fifty-one per cent along with transfer of
control to the buyer.”
9. From a perusal of the aforesaid provisions it is evident that
Section 2(7) defines an assessee to mean a person liable to pay tax under
the Kerala Act. Section 2(20) defines a person to mean an individual etc.
owning, possessing or holding property which includes a corporate as
well. Section 3 of the Kerala Act, which is the charging Section, provides
for charging of tax as per the rates prescribed in the aforesaid Act on the
agricultural income. Section 12 of the Kerala Act enables any person to
carry forward any loss sustained in any year for set-off against the income
of subsequent years. Such loss can be carried forward for a maximum
period of 8 years. Section 48 of the Kerala Act provides that in case, a
person dies, his legal representatives shall be liable to pay tax, which the
deceased would have been liable to pay under the aforesaid Act, if he had
not died. Any proceedings for the purpose can be against the legal heirs
Page 14 of 19
of such deceased person, who shall be deemed to be an assessee under
the aforesaid Act.
9.1 Section 54 of the Kerala Act deals with succession to
business. It provides that where a person carrying on any business has
been succeeded in such capacity by another person, such person and
such other person shall each be assessed in respect of their actual share
of agricultural income in the previous year. Proviso to the aforesaid
section provides that in case a person who succeeded cannot be found,
action can be taken against a person who is succeeding such person. The
succeeding person is liable to pay tax, if any, due from the succeeded
person.
9.2 Section 60 of the Kerala Act deals with the status of a
company in liquidation. In terms thereof, a liquidator of a company, being
wound up under order of the court or otherwise, has to issue notice to the
Agricultural Income Tax Officer, who in turn has to specify to him, the
amount of tax due under the aforesaid Act.
9.3 Section 72A of the 1961 Act deals with carry forward and set
off of accumulated losses and unabsorbed depreciation allowance in the
cases of amalgamation or demerger. The provision, starting with a non-
obstante clause, clearly provides that accumulated losses and
unabsorbed depreciation of the amalgamating company shall be deemed
Page 15 of 19
to be loss or as the case may be, allowance for unabsorbed depreciation
of the amalgamated company for the previous year in which
amalgamation was effected.
10. Learned counsel for the appellant has placed heavy reliance
upon Clause 14.2 of the scheme of amalgamation. The same is extracted
below:
“Clause 14.2. With effect from the Appointed Date, all the
profits or Income accruing or arising to PRPL or expenditure
or losses arising or incurred by PRPL shall, for all purposes,
be treated as and shall deemed to accrue as the profits or
income or expenditure or losses, as the case may be, of
Aspinwall & Co."
11. The fact which was not disputed by learned senior counsel for
the appellant at the time of hearing is that no notice of amalgamation
proceedings was issued to the State of Kerala to raise objection with
reference to any terms referred to with the amalgamation scheme.
13
12. Section 394-A of the Companies Act, 1956 makes it
mandatory on the Tribunal to issue notice in every application filed under
Sections 391 or 394 to the Central Government and any objections raised
13
Hereinafter referred to as ‘1956 Act’
Page 16 of 19
are to be considered. Section 394 of the aforesaid Act talks about
amalgamation of the companies. The Ministry of Corporate Affairs,
Government of India, had issued a Circular dated 15.01.2014 bearing
F.No.2/1/2014 providing that while responding to the notices issued to the
Government under Section 394-A, the Regional Director shall invite
specific comments from the Income Tax Department within 15 days. If no
response is received from the Income Tax Department during the
aforesaid period, it may be presumed that the Income Tax Department
has no objection to the action proposed under Section 391 or 394, as the
case may be. It is in the light of the aforesaid provision and the circular
that the comments of the Income Tax Department are mandatory. The
judgment of this Court in Dalmia Power Ltd.’s case (supra) is dealing
with a case under the Companies Act, 2013 where similar provision is
contained in Section 230(5) specifically and in Rule 8(3) of the Companies
(Compromises, Arrangements and Amalgamations) Rules, 2016. There
is a specific finding recorded in the aforesaid judgment that despite notice,
Income Tax Department did not raise any objection, within the stipulated
time, to the scheme, as proposed. The same was approved. As the
scheme was approved, all terms and conditions contained therein stood
approved and could be acted upon.
Page 17 of 19
13. The facts in the present case are distinguishable. Neither
there is any statutory requirement for issuing notice to the State
Government before any scheme of amalgamation is approved by the
Court under the 1956 Act nor such notice was issued. Hence, to state
that the judgment in covers the case
Dalmia Power Ltd.’s case (supra)
of the appellant, is misconceived and deserves to be rejected. Ordered
accordingly.
14. Learned counsel for the appellant has not been able to refer
to any provision under the Kerala Act in terms of which the losses suffered
by amalgamating company can be set-off against the income of the
amalgamated company. His main reliance was only on the Clause 14.2
in the scheme of amalgamation. The argument addressed with reference
thereto has already been dealt with in the previous paragraphs and
rejected.
15. There is another finding on facts recorded by the High Court
in the impugned order dated 23.09.2011 dealing with the Assessment
Year 2006-07, i.e. that the loss of the amalgamating company/Pullangode
Rubber & Produce Co. Ltd. pertained to a period beyond 8 years.
Assessment years in all other appeals are subsequent to that. Hence, in
terms of Section 12 of the Kerala Act the appellant/Aspinwall and Co. Ltd.
will not be entitled to any set-off. It is a case wherein the appellant had
Page 18 of 19
lost in all fora. To challenge the aforesaid findings of fact recorded by the
High Court in the impugned order, no specific ground has been raised in
the petitions filed before this Court.
16. For the reasons mentioned above, we do not find any merit in
the present appeals. The same are accordingly dismissed. There shall
not be any order as to costs.
17. Pending application(s), if any, shall also stand disposed of.
……………….……………..J.
(RAJESH BINDAL)
……………….……………..J.
(VIJAY BISHNOI)
New Delhi;
April 13, 2026.
Page 19 of 19