Section 72AA

Section 72AA — the law in short

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

• Bangiya Gramin Vikash Bank v ACIT ITATHelps taxpayerNo later treatment found
  Five regional rural banks were merged into our bank by a Central Government notification. The officer says s.72AA is only for banking companies and that s.72AB for cooperative societies only came in from assessment year 2008-09, so the merged banks' accumulated losses die. Is there any authority the other way?
  Yes, at Tribunal level. The Kolkata Bench held that the case fell under s.72AA because the assessee is a banking company doing the business of banking and the amalgamation of the five rural banks was brought into force under the directions of the Central Government by gazette notification, and allowed the set-off of the accumulated losses of the merged banks. The set-offs allowed were Rs. 352,68,36,000 for assessment year 2007-08 and Rs. 205,51,01,000 for assessment year 2008-09.
• 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.