A scheme of amalgamation between Beta Manufacturing Ltd. (amalgamating company) and Gunjan Industries Ltd. (amalgamated company) was approved by the National Company law Tribunal. The amalgamation of two companies became

CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · PYQS · June 2026
A scheme of amalgamation between Beta Manufacturing Ltd. (amalgamating company) and Gunjan Industries Ltd. (amalgamated company) was approved by the National Company law Tribunal. The amalgamation of two companies became effective from 1st April, 2025. The following business losses and unabsorbed depreciation of Beta Manufacturing Ltd. are given below: Assessment Year Business Loss (₹) Unabsorbed Depreciation (₹) A.Y. 2017-18 25,00,000 10,00,000 A.Y. 2018-19 18,00,000 5,00,000 A.Y. 2024-25 12,00,000 6,00,000 A.Y. 2025-26 35,00,000 — Other Information: (1) The amalgamated company had a net profit of ₹ 20,00,000 before set-off of losses for the Financial Year 2025-26. (2) All the conditions specified under Section 72A of the Income-tax Act, 1961, as amended by the Finance Act, 2025, for the carry forward of losses and unabsorbed depreciation in the case of amalgamation are satisfied. (3) Gunjan Industries Ltd. has not opted for the provision of section 115BAA. Based on the above information, answer the following: Examine whether Gunjan Industries Ltd. is eligible to carry forward and set-off the accumulated business losses and unabsorbed depreciation of Beta Manufacturing Ltd. for the Assessment Year 2026-27. Also state the period for which such accumulated losses and unabsorbed depreciation can be carried forward by the amalgamated company.

Answer & Explanation:

Where an amalgamation takes place and the prescribed conditions under Section 72A of the Income Tax Act, 1961 are satisfied, the amalgamated company is allowed to carry forward and set-off the accumulated business losses and unabsorbed depreciation of the amalgamating company. Hence, Gunjan Industries Ltd., being the amalgamated company, shall be eligible to carry forward and set off the accumulated business losses and unabsorbed depreciation of Beta Manufacturing Ltd. from the Assessment Year 2026-27 and onwards. Period of Carry Forward 1. Accumulated Business Loss: As per the amendment vide Finance Act, 2025, the amalgamated company can claim such losses and it can be carried forward only for the remaining period out of the original 8 assessment years counted from the year in which the loss was first incurred by the amalgamating company. 2. Unabsorbed Depreciation: As per Section 32(2) of the Income-tax Act, 1961, unabsorbed depreciation can be carried forward indefinitely. Therefore, the amalgamated company can continue to carry forward and set off such unabsorbed depreciation without any time limit until it is fully absorbed.

Topics: Corporate Tax Planning

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