Yellow Overseas Ltd. (YOL) merged with Yellow India Ltd. (YIL). YOL availed the benefit of amortisation of preliminary expenses only for two years till merger order. Whether YIL is eligible to avail this benefit for the

The benefit of amortisation of preliminary expenses under Section 35D of the Income Tax Act, 1961, is ordinarily available only to the assessee who incurred the expenditure. However, the benefit will not be lost in case the undertaking of an Indian company which is entitled to the amortisation is transferred to another Indian company in a scheme of amalgamation. If the amalgamation occurs within the 10 years/5 years period of amortisation, the amount of preliminary expenses of the amalgamating company (YOL) to the extent not yet written off shall be allowed as a deduction to the amalgamated company (YIL) in the same manner as would have been allowed to the amalgamating company. Since YOL availed the benefit for two years, YIL would be eligible to avail this benefit for the remaining period of amortisation, provided the amalgamation happened within the prescribed period for amortisation.