A comapny having two undertakings in two different cities(say for eg. Gujarat and Karnataka) is getting amalgamated with another company which is in the same line of business(both being industrial undertakings).
There are huge unabsorbed business losses and unabsorbed depreciation of the amalgamating company which will belong to the amalgamated comapny once the amalgamation is over and on the fulfillment of certain conditions as per sec 72A.
the conditions to be fulfilled by Amalgamated Co are quoted from the section as follows:
(b) the amalgamated company—
(i) holds continuously for a minimum period of five years from the date of amalgamation at least three-fourths of the book value of fixed assets of the amalgamating company acquired in a scheme of amalgamation;
(ii) continues the business of the amalgamating company for a minimum period of five years from the date of amalgamation;
(a) the amalgamated company, owning an industrial undertaking of the amalgamating company by way of amalgamation, shall achieve the level of production of at least fifty per cent of the installed capacity of the said undertaking before the end of four years from the date of amalgamation and continue to maintain the said minimum level of production till the end of five years from the date of amalgamation :
My Doubt:
1) as per the last condition, amalgamated co must achieve 50% of the installed capacity. So does this mean 50% capacity of both the units or of the unit as a whole. Coz in the present case there are two units of the amalgamating co.
Coz in the present case the amalgamated co is planning to close the operations of Gujarat unit which accounts for less than 50% of the installed capacity. Can it do so? Will it lead to fulfillment of conditions to claim deduction of unabsorbed depreciation and business losses of amalgamating co???
PLZ HELP!!
CAclubindia
