Amalgamated Company Cannot Claim Set-Off of Pre-Amalgamation Losses Under Kerala Agricultural Income Tax Act

Case Name: Aspinwall and Co. Ltd. v. Inspecting Assistant Commissioner
Citation: 2026 INSC 359
Date of Judgment/Order: April 13, 2026
Bench: Justice Rajesh Bindal and Justice Vijay Bishnoi

Held: The Supreme Court held that under the Kerala Agricultural Income Tax Act, 1991, an amalgamated company is not entitled to claim set-off of accumulated losses of the amalgamating company, as the statutory scheme permits such benefit only to the assessee who actually incurred the losses. The Court clarified that in the absence of a provision analogous to Section 72A of the Income Tax Act, 1961, the benefit of carry forward and set-off of losses cannot be extended to a successor entity merely on the basis of an amalgamation scheme.

Summary: The appeals arose from a dispute regarding whether an amalgamated company could claim set-off of accumulated losses of the amalgamating company under the Kerala Agricultural Income Tax Act. The appellant company had amalgamated another entity with accumulated losses and sought to set-off those losses against its own income, relying on provisions of the Act and a clause in the amalgamation scheme. The claim was rejected by the tax authorities, the Tribunal, and upheld by the Kerala High Court. Before the Supreme Court, the appellant argued that Section 54 of the Act and the approved scheme of amalgamation entitled it to such benefit, relying on the precedent in Dalmia Power Ltd. The respondent contended that the statutory framework permits set-off only to the original assessee and that no notice was issued to the State during amalgamation proceedings. The Court examined the statutory provisions and distinguished the Dalmia Power judgment, holding that the Kerala Act lacks any provision enabling transfer of losses upon amalgamation and that contractual clauses cannot override statutory requirements. It also noted that the losses in question pertained to a period beyond the permissible eight-year carry-forward limit.

Decision: The Supreme Court dismissed all the appeals, upheld the High Court’s findings, and held that the appellant was not entitled to claim set-off of the amalgamating company’s losses, with no order as to costs and all pending applications disposed of.