2026 INSC 359 Page 1 of 19

REPORTABLE

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.

Page 2 of 19

FACTS OF THE CASES

2. In Civil Appeal No.7796 of 2012 challenge is to the order dated

23.09.2011 passed by the High Court

1

in OTC No.3 of 2011 whereby

order dated 22.03.2011 passed in AITA Nos.2/2010 by the Kerala

Agricultural Income Tax and Sales Tax Appellate Tribunal

2

, 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 3 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.

4. A company named ‘Pullangode Rubber & Produce Co. Ltd.

3

was amalgamated with the appellant company

4

. 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

the Kerala Agricultural Income Tax Act, 1991

5

, 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 4 of 19

judgment of this Court in Dalmia Power Ltd. and Another v. Assistant

Commissioner of Income-Tax

6

, 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 5 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 6 of 19

Income Tax Act, 1961

7

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 7 of 19

of the arguments, reliance was placed upon the judgment of this Court in

General Radio & Appliances Co. Ltd. v. M.A. Khader,

8

Saraswati

Industrial Syndicate Ltd. v. CIT,

9

Singer India Limited v. Chande r

Mohan Chadha and Others,

10

CIT v. Maruti Suzuki (India) Ltd.,

11

and

Religare Finvest Ltd. v. State (NCT of Delhi).

12

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 8 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 9 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

(Central Act 1 of 1956) with effect from 1

st

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 10 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 11 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 12 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 13 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 14 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 15 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 16 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.

12. Section 394-A of the Companies Act, 1956

13

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 17 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 18 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 Dalmia Power Ltd.’s case (supra) covers the case

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 19 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.