Finmin rejects sops for private airline M&As

New Delhi: The revenue department in the finance ministry has ruled out tax sops for mergers and acquisitions between private airlines.
The Income-Tax Act allows the transferee company to carry forward and set off unabsorbed depreciation and losses of the transferor company under Section 72A, as done in the case of the Indian Airlines and Air-India merger.
In a note to the finance ministry, the civil aviation ministry had requested that the benefit given to Indian Airlines and Air-India be extended to the entire aviation industry for “a minimum of five years”.
This, it said, would go a long way towards sustaining and consolidating the current growth in the sector. It pointed out that the telecom sector was allowed this benefit early on, which helped it consolidate and grow.
In the services sector, Section 72A benefits are currently available only for mergers and acquisitions between banks, telcos and software companies. Airlines are, however, not allowed to set off losses and unabsorbed depreciation in the case of amalgamation.
17/02/07 Anupama Airy/Atreyee Dev Roy/Indian Express

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Categories: General Aviation feb 2007