TaxTMI 
TaxTMI 
Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in Business Reorganisation of Co-operative banks - (New) Section 117 / (Old) Section 72AB
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.... to carry forward and set off: • accumulated losses; and • unabsorbed depreciation of the predecessor co-operative bank as if the amalgamation had not occurred. The other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly. Treatment of Losses and Unabsorbed Depreciation on Demerger of Co-operative Banks [ Section 118(2) ] This sub-section deals with the allocation of accumulated losses and unabsorbed depreciation when a demerger of a co-operative bank takes place. The treatment depends upon whether the losses or depreciation are directly connected with the transferred undertaking. Section 118(2)(a) - Transfer of Directly Re....
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....ng Period Requirement • The predecessor bank must have been engaged in the business of banking for at least three years before the business reorganisation. • (ii) Continuity of Fixed Assets Before Reorganisation • The predecessor bank must have continuously held at least three-fourths of the book value of fixed assets for two years immediately before business reorganisation. (b) Section 118(3)(b) - Conditions Applicable to Successor Co-operative Bank • (i) Retention of Acquired Fixed Assets • The successor co-operative bank must continue to hold at least three-fourths of the book value of fixed assets acquired from the predecessor bank for a minimum period of five years aft....
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....eorganisation up to the end of the tax year, shall be treated as two separate tax years for purposes of: • carry forward and set off of losses; and • depreciation allowance. For the purposes of this section Meaning of important Term • (a) "accumulated loss" means so much of the loss of amalgamating co-operative bank or demerged co-operative bank as referred to in section 112 in the hands of predecessor co-operative bank, which such predecessor co-operative bank would have been entitled to carry forward and set off under the said section, as if the business reorganisation had not taken place; • (b) "amalgamated co-operative bank", "amalgamating co-operative bank", "amalgamat....
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....nking for three or more years; and • (ii) has held at least three-fourths of the book value of fixed assets as on the date of the business reorganisation, continuously for two years prior to the date of business reorganisation; [ Section 72AB(2) ] • (b) the successor co-operative bank • (i) holds at least three-fourths of the book value of fixed assets of the predecessor co-operative bank acquired through business reorganisation, continuously for a minimum period of five years immediately succeeding the date of business reorganisation; • (ii) continues the business of the predecessor co-operative bank for a minimum period of five years from the date of business reo....
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....rged co-operative bank if the whole of the amount of such loss or unabsorbed depreciation is directly relatable to the undertakings transferred to the resulting co-operative bank; or (ii) the amount which bears the same proportion to the accumulated loss or unabsorbed depreciation of the demerged co-operative bank as the assets of the undertaking transferred to the resulting co-operative bank bears to the assets of the demerged co-operative bank if such accumulated loss or unabsorbed depreciation is not directly relatable to the undertakings transferred to the resulting co-operative bank. • The period commencing from the beginning of the previous year and ending on the date immediately preceding the date of business re....