New IT Act 2025 — Knowledge Bank

Conditions for carry forward and set off of losses on change in shareholding

Section 117 — Conditions for carry forward and set off of losses on change in shareholding

Old Act equivalent: Section 79 of IT Act 1961 Sub-part: Set off, or carry forward and set off of losses

Statutory Text

  1. (1) Irrespective of anything contained in section 2(6)(a) to (c) or section 116, where there has been an amalgamation of,—

(a) one or more banking company with—

(i) any other banking institution under a scheme sanctioned and brought into force by the Central Government under section 45(7) of the Banking Regulation Act, 1949 (10 of 1949); or

(ii) any other banking institution or a company following a strategic disinvestment, wherein the amalgamation occurs within five years from the end of the tax year during which such disinvestment is carried out; or

(b) one or more corresponding new bank or banks with any other corre sponding new bank under a scheme brought into force by the Central Government under section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or under section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or both; or

(c) one or more Government company or companies with any other Gov ernment company under a scheme sanctioned and brought into force by the Central Government under section 16 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), the accumulated loss and unabsorbed depreciation of such banking company or companies or amalgamating corresponding new bank or banks or amalgamating Government company or companies, shall be deemed to be the loss or, allowance for depreciation of the banking institution or company or amalgamated corres- ponding new bank or amalgamated Government company for the tax year in which the scheme of amalgamation was brought into force and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly. (2) Where any scheme of amalgamation as referred to in sub-section (1) is brought into force on or after the 1st April, 2025, any loss forming part of the accumulated loss of the predecessor entity, being—

(i) the banking company or companies;

(ii) the amalgamating corresponding new bank or banks; or

(iii) the amalgamating Government company or companies, as the case may be, which is deemed to be the loss of the successor entity, being—

(a) the banking institution or company; or

(b) the amalgamated corresponding new bank or banks; or

(c) the amalgamated Government company or companies, as the case may be, shall be carried forward in the hands of the successor entity for not more than eight tax years immediately succeeding the tax year for which such loss was first computed for original predecessor entity. (3) For the purposes of this section,—

(a) “accumulated loss” means so much of the loss of the amalgamating banking company or companies or amalgamating corresponding new bank or banks or amalgamating Government company or companies under the head “Profits and gains of business or profession” (excluding losses of a speculation business) which such predecessor entity would have been entitled to carry forward and set off under section 112 had the amalgamation not occurred;

(b) “banking company” shall have the same meaning as assigned to it in section 5(c) of the Banking Regulation Act, 1949 (10 of 1949);

(c) “banking institution” shall have the same meaning as assigned to it in section 45(15) of the Banking Regulation Act, 1949 (10 of 1949);

(d) “corresponding new bank” shall have the same meaning as assigned to it in section 2(d) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or section 2(b) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980);

(e) “general insurance business” shall have the same meaning as assigned to it in section 3(g) of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972);

(f) “Government company” means a Government company as defined in section 2(45) of the Companies Act, 2013 (18 of 2013), engaged in the general insurance business and established under section 4 or 5 or 16 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972);

(g) “original predecessor entity” means predecessor entity in respect of the first amalgamation;

(h) “strategic disinvestment” shall have the meaning assigned to it in section 116(3)(c)(i);

(i) “unabsorbed depreciation” means the allowance for depreciation of the amalgamating banking company or companies or amalgamating corre sponding new bank or banks or amalgamating Government company or companies which remains to be allowed and which would have been allowed to such predecessor entity, had the amalgamation not occurred.

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

Provisos

None.

Explanations

None.

Tables

Present in statutory text above — see formatted section.

Key Structure

  • Applies to: Companies (not being companies in which public are substantially interested)
  • Conditions: Shares carrying at least 51% voting power must be held by same persons on last day of year of loss and last day of year of set off
  • Time limits: N/A — condition must be met at time of set off
  • Monetary limits: No specific monetary limit
  • Exceptions: Does not apply to companies undergoing NCLT-approved resolution plan under IBC; eligible start-ups under section 140; companies where change in shareholding occurs due to death or gift; strategic disinvestment

Cross-References

  • Section 2
  • Section 3
  • Section 4
  • Section 5
  • Section 9
  • Section 16
  • Section 45
  • Section 112
  • Section 116

Amendment Notes

None noted from the extracted pages.

Practical Notes

Graph View

Backlinks