Depreciation of amalgamating company shall not be disallowed for non filing of Form 62: Mumbai ITAT
Hon’ble Mumbai ITAT has held that depreciation of amalgamating company shall not be disallowed for the reason that Form 62 as prescribed u/s. 72A(2)(b)(iii) of the Act r.w.r. 9C of the Income Tax Rules, 1962 is not filed, however all conditions stated in section 72 of the Act are fulfilled.
Let us have a Short Overview of the case:
Case details: Sunjewels Private Limited vs DCIT [ITA 4720/Mum/2024]
Facts of the case:
The assessee company namely Sunjewels Private Limited is engaged in the business of manufacturing of gold and diamond studded jewellery. The assessee has set off brought forward business loss / depreciation amounting to Rs. 2,52,04,182/- pertaining to Aditi Jewels Private Limited which got amalgamated with the assessee company. The AO has disallowed the loss / depreciation on the ground that the assessee has not filed Form 62 to show that it has achieved 50% of installed production capacity Aditi Jewels.
Submission before Hon’ble ITAT:
The assessee has satisfied all the conditions prescribed u/s. 72A r.w.r. 9C of the Act but the AO as well as the CIT(A) has merely rejected the assessee’s claim for non-submission of form 62. The assessee was even otherwise not entitled to submit form 62, for the reason that the
nature of business of the assessee company is mainly labour-intensive where
the production is solely dependent on a large number of workers who are skilled or semi-skilled labours. The specified installed capacity as in other industry does not apply to the assessee’s nature of business and therefore, the installed capacity of human being is humanly not possible to be determined in assessee’s case. Installed capacity applies in case of machinery intensive industries and not labour-intensive industry.
Finding of ITAT:
The AO has rejected the assessee’s claim of brought forward business losses only for non-filing of form no. 62, which is not a mandatory condition when the assessee is said to have complied with the other conditions viz. the 50% of installed capacity of its production within 4 years after the merger as per the provisions of the Section 72A of the Act. The assessee’s claim cannot be disallowed merely for non-filing of the form no. 62. However, matter remanded to AO to verify the production post-merger.
The copy of the order is as under:
