Alps (Pvt.) Ltd. is taking over an unlisted company Mountain Ltd., through the route stipulated under section 395 of the Companies Act, 1956. Alps (Pvt.) Ltd. wants to compulsorily acquire the shares of minority sharehol

The takeover achieved through Section 395 of the Companies Act, 1956, will not fall within the meaning of 'amalgamation' under the Income Tax Act . As such, the benefits of amalgamation provided under the Income Tax Act will not be available to the acquisition under consideration. The takeover in this process will not enable Alps (Pvt.) Ltd. to carry forward unabsorbed depreciation and accumulated losses of Mountain Ltd. This is because a takeover under Section 395 does not result in the transferor company (Mountain Ltd.) losing its identity as a separate legal entity. While the ownership changes, Mountain Ltd. continues to exist, and its unabsorbed depreciation and accumulated losses remain with Mountain Ltd. and cannot be transferred to Alps (Pvt.) Ltd. unless it is a statutory amalgamation as defined under the Income Tax Act.