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: Compute the taxable income of Gunjan Industries Ltd. for the assessment year 2026-27 after its amalgamation with Beta Manufacturing Ltd.

Answer & Explanation:

Computation of the Taxable Income of Gunjan Industries Ltd. for the Assessment Year 2026-27 Particular Amount (₹) Profit before set-off of losses & Unabsorbed Depreciation 20,00,000 Less: Set-off of loss for A.Y. 2017-18 [Not allowed, since period of 8 year has been expired] -- Less: Set-off of loss for A.Y. 2018-19 (18,00,000) Less: Set-off of losses for A.Y. 2024-25 (2,00,000) Net Profit after set-off of losses Nil Working Note: The brought forward business losses are set-off first, as they are subject to a specified time limit for carry forward. Unabsorbed depreciation is set off only after adjusting all the business losses, since it can be carried forward indefinitely. This method ensures that the assessee derives the maximum benefit from the provisions relating to carry forward and set-off of losses and depreciation. This treatment is consistent with the provisions relating to amalgamation under Section 72A of the Income-tax Act, 1961, where accumulated losses and unabsorbed depreciation of the amalgamating company are treated as those of the amalgamated company, subject to prescribed conditions.

Topics: Corporate Tax Planning

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