CBDT issues clarification regarding carry forward of losses in case of change in shareholding due to strategic disinvestment
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As per recent CDBT notification which is issued to clarify carry forward of losses in case of change in shareholding due to strategic disinvestment.
Finance Act 2021 amended the section 72A of Income Tax Act, 1961 and provide that in case of an amalgamation of PSU which ceases to be PSU (Public Sector company), as a part of strategic disinvestment, with one or more company, then subject to condition as laid therein, the accumulated loss and the unabsorbed depreciation of amalgamating company shall be deemed to be the loss, or the case may be, allowance for unabsorbed depreciation of the amalgamating company for the previous year in which the amalgamating was effective.
Section 72A deals with the provision relating to carry forward and setoff of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger.
Further, the press release states that In order to facilitate the strategic disinvestment, it has been decided that Section 79 of the Income-tax Act, 1961, shall not apply to an erstwhile public sector company which has become so as a result of strategic disinvestment. Accordingly, loss incurred in any previous year prior to, and including, the previous year of strategic disinvestment shall be carried forward and set off by the erstwhile public sector company. The above relaxation shall cease to apply from the previous year in which the company, that was the ultimate holding company of such erstwhile public sector company immediately after completion of the strategic disinvestment, ceases to hold, directly or through its subsidiary or subsidiaries, fifty-one per cent of the voting power of the erstwhile public sector company.
Necessary legislative amendments for the above decision shall be proposed in due course of time.
Source: https://pib.gov.in/PressReleseDetailm.aspx?PRID=1753960
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