10. Special Provisions Regarding Losses Relating To Companies Only" [ Assessments of 'Companies']

Provisions relating to carry forward and set-off of accumulated loss and unabsorbed depreciation in certain cases of amalgamation [Section 72A]

 

In case a company owning all industrial undertaking amalgamates with another company, the accumulated and the unabsorbed depreciation of amalgamating company shall be deemed to be the loss or depreciation of the amalgamated company for the previous year in which amalgamation was effected and the other provisions of this Act relating to set-off and carry forward of loss and unabsorbed depreciation shall apply accordingly provided the following conditions are fulfilled

 

(1)       that the accumulated loss of the amalgamating company before amalgamation exceeds fifty per cent of the aggregate of its paid-up share capital ; that the amalgamating company was not, immediately before its amalgamation financially viable ; that the amalgamation was in public interest; that such other conditions as Central Government may notify in the Official Gazette to ensure that the benefit under this section would facilitate the rehabilitation or revival of the business of amalgamating company ; and the Central Government makes declaration to this effect under section 72A (1).

 

(ii)       The benefit of set-off or carry forward shall not be available to the amalgamated company if it carried on the business of amalgamating company after making any modification or reorganisation and such modifications or reorganisation are not approved by prescribed authority. The amalgamated company shall have to furnish along with return of income, a certificate from the specified authority to the effect that adequate steps have been taken by the company for the rehabilitation or revival of the business of the amalgamating company [Section 72(2)1.

 

The Specified authority shall communicate to the amalgamating company about the fact that it is satisfied with the scheme submitted and it would make such recommendations to the Central Government after amalgamation is affected.

 

Accumulated Loss.

means so much of loss of the amalgamating company under the head “Profits and Gains of Business or Profession” (not being a loss sustained in a speculation business) which the amalgamating company would have been entitled to carry forward and set-off under the provisions of section 75, if the amalgamation had not been affected.

 

Unabsorbed Depreciation.

It means so much of the allowance of depreciation of the amalgamating company, which remains to be allowed and which would have been allowed to the amalgamating company under the provisions of the Act f the amalgamation had not been effected.

 

Provisions relating to carry forward and set-off of accumulated loss and unabsorbed depreciation allowance in scheme of amalgamation of banking company in certain cases [Section 72AA]

 

Notwithstanding anything contained in 72(2)(IB) (i) to (iii) where there has been an amalgamation of a banking company with any other banking institution under a scheme sanctioned and brought into force by the Central Government under section 45(7) of the Banking Regulation Act, 1949 the accumulated loss and the unabsorbed depreciation of such banking company shall be deemed to be the loss or, as the case may be, allowance for depreciation of such banking institution for the previous year in which the scheme of amalgamation was brought into force and other provisions of this Act relating to set-off and carry forward of loss and allowance for depreciation shall apply accordingly.

For the purposes of this section

 

(i)         “Accumulated loss” means so much of the loss of the amalgamating banking company under the head “Profits and gains of business or profession” (not being a loss sustained in a speculation business) which such amalgamating banking company, would have been entitled to carry forward and set-off under the provisions of section 72 if the amalgamation had not taken place

(ii)        “banking company” shall have the same meaning assigned to it in section 5(c) of the Banking Regulation Act, 1949.

 

(iii) “banking institution” shall have the same meaning assigned to it in sub-section (15) of section 45(15) of the Banking Regulation Act, 1949.

(iv)       “unabsorbed depreciation” means so much of the allowance for depreciation of the amalgamating banking company which remains to be allowed and which would have been allowed to such banking company if amalgamation had not taken place.

 
 

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