Section 72A(7)

Section 72A(7) — the law in short

What the courts have decided on section 72A(7), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Statutory position — s.72A(6B): inserted by the Finance Act, 2025 with effect from 1 April 2026, an inherited business loss runs only eight assessment years from the year it was first computed for the original predecessor entity, for any reorganisation effected on or after 1 April 2025 CBDT Circulars & InstructionsCuts both ways
  We are planning an amalgamation this year and the target has losses that are already several years old. Does the eight-year clock restart in our hands?
  No — not for an amalgamation or business reorganisation effected on or after 1 April 2025. Sub-section (6B) of section 72A provides that where any amalgamation or business reorganisation is effected on or after that date, any loss forming part of the accumulated loss of the predecessor entity under sub-section (1), (6) or (6A) which is deemed to be the loss of the successor entity shall be carried forward in the successor's hands for not more than eight assessment years immediately succeeding the assessment year for which such loss was first computed for the original predecessor entity. "Original predecessor entity" is defined in s.72A(7)(ab) as the predecessor entity in respect of the FIRST amalgamation under sub-section (1) or the first business reorganisation under sub-section (6) or (6A). Sub-section (6B) and the definition in s.72A(7)(ab) were inserted by the Finance Act, 2025 (Act No. 7 of 2025) with effect from 1 April 2026, so the provision first governs assessment year 2026-27 — which is the first assessment year in which a reorganisation effected on or after 1 April 2025 can fall, the two dates dovetailing exactly.
• Statutory position — s.72A(1) and s.72A(7)(aa): which amalgamations carry accumulated loss and unabsorbed depreciation across, and the closed definition of "industrial undertaking" CBDT Circulars & InstructionsCuts both ways
  We amalgamated a loss-making service company into ours. The Assessing Officer says section 72A does not apply at all because there is no industrial undertaking. Is that right, and what does the section actually cover?
  Section 72A(1) does not apply to every amalgamation. It applies to an amalgamation of (a) a company owning an industrial undertaking or a ship or a hotel with another company, (b) a banking company within s.5(c) of the Banking Regulation Act, 1949 with a specified bank, (c) one or more public sector companies with one or more public sector companies, or (d) an erstwhile public sector company with one or more companies where the share purchase agreement entered into under strategic disinvestment restricted immediate amalgamation and the amalgamation is carried out within five years from the end of the previous year in which that restriction ends. "Industrial undertaking" is exhaustively defined in s.72A(7)(aa) as an undertaking engaged in the manufacture or processing of goods, the manufacture of computer software, the business of generation or distribution of electricity or any other form of power, the business of providing telecommunication services (basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services), mining, or the construction of ships, aircrafts or rail systems.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.