Page 99 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes (ii) It continues the business of the predecessor co-operative bank for a minimum period
of five years from the date of business reorganisation; and

(iii) It fulfils such other conditions as may be prescribed to ensure the revival of the

business of the predecessor co-operative bank or to ensure that the business
reorganisation is for genuine business purpose.

Amount of Set-off of the Accumulated Loss and Unabsorbed Depreciation

The amount of set-off of the accumulated loss and unabsorbed depreciation allowable to the
resulting co-operative bank has to be calculated in the following manner -

1. In a case where the whole of the amount of such loss or unabsorbed depreciation is directly
relatable to the undertakings transferred to the resulting co-operative bank: The entire
accumulated loss or unabsorbed depreciation of the demerged co-operative bank is allowed
to be set-off.
2. In a case where the accumulated loss or unabsorbed depreciation is not directly relatable to
the undertakings transferred to the resulting co-operative bank: The amount which bears
the same proportion to the accumulated loss or unabsorbed depreciation of the demerged
co-operative bank as the assets of the undertaking transferred to the resulting co-operative
bank bears to the assets of the demerged co-operative bank.

Example: If A Co-op. Bank is the demerged co-operative bank and B Co-op. Bank is
the resulting co-operative bank, the amount of set-off of the accumulated loss and unabsorbed
depreciation allowable to B Co-op. bank would be –
Assets of the undertaking transferred unabsorbed business loss/depreciation
to B Co-op. bank of A Co-op. bank Assets of A Co-op. bank

The Central Government may specify other conditions by notification in the Offi cial Gazette

as it considers necessary, to ensure that the business reorganisation is for genuine business
purposes.
The period commencing from the beginning of the previous year and ending on the date
immediately preceding the date of business reorganisation, and the period commencing from
the date of such business reorganisation and ending with the previous year shall be deemed to be
two different previous years for the purposes of set off and carry forward of loss and allowance
for depreciation.

Example: If the date on which business re-organisation took place is 1.11.2012, then the
period between 1.4.2012 and 31.10.2012 and the period between 1.11.2012 and 31.3.2013 would
be deemed to be two different previous years for the purposes of set-off and carry forward of
unabsorbed business losses and depreciation.

In a case where the conditions specified in benefit of carry-forward and set-off of accumulated

losses on fulfilment of certain conditions mentioned above or notified under Offi cial Gazette

by Central Government are not complied with, the set-off of accumulated loss or unabsorbed
depreciation allowed in any previous year to the successor co-operative bank shall be deemed
to be the income of the successor co-operative bank chargeable to tax for the year in which the
conditions are not complied with.
Accumulated loss means so much of loss of the amalgamating co-operative bank or the demerged

co-operative bank, as the case may be, under the head “Profits and gains of business or profession”
(not being a loss sustained in a speculation business) which such amalgamating co-operative
bank or the demerged co-operative bank, would have been entitled to carry forward and set-off
under the provisions of section 72 as if the business reorganisation had not taken place.

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