1. The assessee is a Company IGate Computer Systems Limited (ICSL) engaged in business of Software Development services and IT enabled services (hereinafter called as “Amalgamating Company”) amalgamated with the assessee Company (hereinafter called as Amalgamated Company”) under the scheme approved by Hon’ble High Court.
 

2. The Amalgamated Company declared total income of INR 6,98,02,52,640/- after taking into consideration set-off of brought forward long-term capital loss from amalgamating company.
 

3. The Amalgamated Company claimed brought forward long-term capital loss of INR 109.86 Crore out of which INR 104.46 Crore was long term capital loss of ICSL on the first day of the financial year under consideration. The same was disallowed by the Assessing Officer.
 

4. The assessee company submitted that the Scheme of amalgamation approved by the Hon’ble High Court, provided that the loss etc. of the amalgamating company shall be available to the amalgamated company, Hence, the assessee company shall be allowed to set-off of long- term capital loss of amalgamating company.
 

5. Assessing Officer took note of the provisions of section 72A of the Income Tax Act (“IT Act”). Section 72A of the IT Act provides for set off and carry forward of loss only of the brought forward loss and unabsorbed depreciation of the amalgamating company in the hands of amalgamated company.
 

6. Assessing Officer concluded that such provision did not cover long term capital loss. Hence, the assessee company is not allowed to set off long term capital loss of amalgamating company. The Assessing Officer also did not find any applicability of section 74 of the IT Act in allowing set-off of long-term capital loss to amalgamated
company.
 

7. The IT AT contended that section 72A of the IT Act, exclusively applies to set off and carry forward of accumulated losses and unabsorbed depreciation of the amalgamating company in relation to income under the head ‘Profits and gains from business and profession’. It is not applicable to all the tax related issues of amalgamation.
 

8. ITAT took note of section 74 of the IT Act, which states that, the ‘assessee’ shall be allowed to carry forward and set off long term capital loss if the loss could not be set off wholly during the relevant previous year. The scheme of amalgamation approved by High Court specifically states that the losses shall be transferred and vest with the transferee company.
 

9. The ITAT also contended that, the term ‘assessee’ as referred to in section 74 of the IT Act, originally referring to the amalgamating company shall now be substituted as the amalgamated company not only because of the scheme of amalgamation but also because of the assessee becoming a successor.
 

10. Therefore, the I TAT Order was passed in favor of the Amalgamated Company allowing the set-off of the brought forward long-term capital loss under the provisions of section 74 of the IT Act.