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Unit 4: Set-off and Carry Forward of Losses

(iii) “banking institution” shall have the same meaning assigned to it in sub-section (15) of Notes
section 45 of the Banking Regulation Act, 1949;
(iv) “unabsorbed depreciation” means so much of the allowance for depreciation of the
amalgamating banking company which remains to be allowed and which would have
been allowed to such banking company if the amalgamation had not taken place.

Self Assessment

Fill in the blanks:
13. ................................ means so much of the loss of the amalgamating banking company under

the head Profits and gains of business or profession.
14. ................................ shall have the same meaning assigned to it in clause (c) of section 5 of
the Banking Regulation Act, 1949.

4.6 Section 72AB

Under this section, in a case where the amalgamation has taken place during the previous year,
set-off of accumulated loss and the unabsorbed depreciation of the predecessor co-operative
bank will be allowed in the hands of the successor co-operative bank as if the amalgamation had
not taken place. All the other provisions of this Act relating to set off and carry forward of loss
and allowance for depreciation would apply accordingly.

Did u know? Section 32(2) provides for the carry forward of unabsorbed depreciation. It
reads as:
“where in the assessment of the assessee, full effect cannot be given to any allowance under

Sub-section.(1) in any previous year, owing to there being no profits or gains chargeable for that
previous year or owing to the profits or gains chargeable being less than the allowance, then subject

to the provisions of Sub-section (2) of Section 72 and Sub-section (3) of Section 73, the allowance
or the part of the allowance to which effect has not been given, as the case may be, shall be added to
the amount of the allowance for depreciation for the following previous year and deemed to be part of
that allowance or if there is no such allowance for that previous year, be deemed to be the allowance
for the previous year and so on for the succeeding previous years.”

Conditions

The benefit of carry-forward and set-off of accumulated losses under this section would be

allowed only on fulfilment of the following conditions:

(a) Conditions to be fulfilled by the predecessor co-operative bank:
(i) It should have been engaged in the business of banking for three or more years; and

(ii) It 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 prior to the date of business
reorganisation;

(b) Conditions to be fulfilled by the successor co-operative bank:
(i) It should hold at least three-fourths of the book value of fixed assets of the predecessor

co-operative bank acquired through business reorganisation, continuously for
a minimum period of five years immediately succeeding the date of business

reorganisation;

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