Treatment of accumulated losses and unabsorbed depreciation in amalgamation or demerger, etc.

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....y with one or more company or companies, if the share purchase agreement entered into under strategic disinvestment restricted immediate amalgamation of the said public sector company and the amalgamation is carried out within five years from the end of the tax year in which the restriction on amalgamation in the share purchase agreement ends, then, irrespective of anything in any other provision of this Act, the accumulated loss and unabsorbed depreciation of the amalgamating company shall be deemed to be the loss or, allowance for unabsorbed depreciation of the amalgamated company for the tax year in which the amalgamation was effected, and other provisions of this Act relating to set off and carry forward of loss and allowance for dep....

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....ent or the public sector company or any two or all of them. (4) Irrespective of anything contained in sub-section (1), the accumulated loss shall not be set off or carried forward and the unabsorbed depreciation shall not be allowed in the assessment of the amalgamated company unless,- (a) the amalgamating company- (i) has been engaged in the business, in which the accumulated loss occurred or depreciation remains unabsorbed, for three or more years; (ii) has held continuously as on the date of the amalgamation, at least three-fourths of the book value of fixed assets held by it two years preceding the date of amalgamation; (b) the amalgamated company- (i) holds continuously for a minimum five....

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....be allowed to be carried forward and set off in the hands of the demerged company or the resulting company, as applicable. (7) The Central Government may, by notification, specify such conditions to ensure that the demerger is for genuine business purposes. (8) If there has been a business reorganisation where, a firm is succeeded by a company fulfilling the conditions laid down in section 70(1)(zd) or a proprietary concern is succeeded by a company fulfilling the conditions laid down in section 70(1)(zf), then, irrespective of anything contained in this Act, the accumulated loss and the unabsorbed depreciation of the predecessor firm or the proprietary concern, shall be deemed to be the loss or allowance for depreciation of the succe....

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.... the year in which the non-compliance occurs. (12) For any amalgamation referred to in sub-section (1) or reorganisation of business referred to in sub-section (8) or (10) effected on or after the 1st April, 2025, any loss forming part of the accumulated loss of the predecessor entity, being- (i) the amalgamating company; or (ii) the firm or proprietary concern; or (iii) the private company or unlisted public company, as the case may be, which is deemed to be the loss of the successor entity, being- (a) the amalgamated company; or (b) the successor company; or (c) the successor limited liability partnership, as the case may be, shall be carried forward for not more than eight ta....