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of <h1>New Section 72A in Income-tax Act on Amalgamation: Carry Forward Losses, Depreciation with Conditions for Compliance</h1> The Finance Act, 1999, introduces a new Section 72A in the Income-tax Act, effective April 1, 2000, addressing the carry forward and set off of accumulated losses and unabsorbed depreciation in cases of company amalgamation or demerger. It allows the amalgamated company to treat the losses and depreciation of the amalgamating company as its own, provided it meets certain conditions, such as asset retention and business continuation for five years. In demergers, losses and depreciation are allocated between the demerged and resulting companies. Non-compliance with specified conditions results in the set-off being taxed as income. The government may prescribe conditions to ensure genuine business purposes.
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