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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Corporate Tax Planning

Under section 116 of the Income-tax Act, 2025, which amalgamation qualifies for carry forward of the amalgamating company's accumulated loss and unabsorbed depreciation in the hands of the amalgamated company?

The amalgamation of a company owning an industrial undertaking, a ship or a hotel with another company qualifies under section 116(1)(a). Plain trading companies owning none of these are not covered, so their accumulated losses and unabsorbed depreciation cannot be carried into the amalgamated company.

  1. AAmalgamation of a company owning an industrial undertaking with another companyCorrect
  2. BAmalgamation of two trading companies that own no industrial undertaking, ship or hotel
  3. CAmalgamation of a company with its subsidiary where neither owns any undertaking of the specified kinds
  4. DAmalgamation of a private trading company with a listed trading company

Explanation

Section 116(1)(a) covers the amalgamation of a company owning an industrial undertaking, a ship or a hotel with another company. Mere trading companies, as in the other options, do not fall in any listed category, so the loss and depreciation are not deemed to be those of the amalgamated company.

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