Amendment of section 72A

Section 27 of the Finance Act, 1998 deals with amendment of section 72A. Amendment of section 72A. 27. In section 72A of the Income-tax Act, after sub-section (3) and before the Explanation, the following shall be inserted with effect from the 1st day of April, 1999, namely:— "(4) Where there has been reorganisation of business, whereby, a firm is succeeded by a company

Amendment of section 72A.

27. In section 72A of the Income-tax Act, after sub-section (3) and before the Explanation, the following shall be inserted with effect from the 1st day of April, 1999, namely:—

"(4) Where there has been reorganisation of business, whereby, a firm is succeeded by a company fulfilling the conditions laid down in clause (xiii) of section 47 or a proprietary concern is succeeded by a company fulfilling the conditions laid down in clause (xiv) of section 47, then, notwithstanding anything con­tained in any other provisions of this Act, the accumulated loss and the unabsorbed depreciation of the predecessor firm or the proprietary concern, as the case may be, shall be deemed to be the loss or allowance for depreciation of the successor company for the previous year in which business reorganisation was ef­fected and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly :

Provided that if any of the conditions laid down in the proviso to clause (xiii) or the proviso to clause (xiv) of section 47 are not complied with, the set off of loss or allowance of deprecia­tion made in any previous year in the hands of the successor company, shall be deemed to be the income of the company charge­able to tax in the year in which such conditions are not complied with.

(5) For the purposes of sub-section (4),—

(a) "accumulated loss" means so much of the loss of the prede­cessor firm or the proprietary concern, 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 predeces­sor firm or the proprietory concern would have been entitled to carry forward and set off under the provisions of section 72 if the reorganisation of business had not taken place;

(b) "unabsorbed depreciation" means so much of the allow­ance for depreciation of the predecessor firm or the proprietory concern, as the case may be, which remains to be allowed and which would have been allowed to the predecessor firm or the proprietory concern, as the case may be, under the provisions of this Act, if the reorganisation of business had not taken place."

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Section 27, The Finance Act, 1998.