Income-tax Act, 2025

Carry forward and set off of losses and unabsorbed depreciation in business reorganization of co-operative banks - Section 118

Carry forward and set off of losses and unabsorbed depreciation in business reorganization of co-operative banks.

118. (1) The assessee, being a successor co-operative bank, shall, in a case where the amalgamation has taken place during the tax year, be allowed to set off the accumulated loss and the unabsorbed depreciation, if any, of the predecessor co-operative bank as if the amalgamation had not taken place, and all the other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly.

(2) In case of a co-operative bank where demerger takes place during the tax year, and where the accumulated loss or unabsorbed depreciation of the demerged co-operative bank

(a) is directly relatable to the undertaking transferred, the whole of such accumulated loss or unabsorbed depreciation shall be allowed to be carried forward and set off against the income of the resulting co-operative bank; and

(b) is not directly relatable to the undertaking transferred, then such accumulated loss or unabsorbed depreciation shall first be apportioned between the demerged co-operative bank and the resulting co-operative bank in the same proportion in which assets of the undertaking are distributed between the demerged co-operative bank and the resulting co-operative bank, and be allowed to be carried forward and set off against their respective incomes.

(3) The provisions of this section shall apply, if

(a) the predecessor co-operative bank

(i) has been engaged in the business of banking 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 before the date of business reorganisation;

(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 .... To read the full section download the app from Google Play store