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Past Losses Of PSUs Can Be Carried Forward, Clarify CBDT

Income Tax India took to Twitter and wrote, "CBDT issues clarification regarding carrying forward of losses in case of change in shareholding due to strategic disinvestment. Section 79 of the Income-tax Act, 1961 not to apply in a case involving a change in shareholding due to such strategic disinvestment."

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CBDT

The Central Board of Direct Taxes (CBDT), on Friday, issued a clarification regarding the carrying forward losses in case of change in shareholding.

Income Tax India took to Twitter and wrote, "CBDT issues clarification regarding carrying forward of losses in case of change in shareholding due to strategic disinvestment. Section 79 of the Income-tax Act, 1961 not to apply in a case involving a change in shareholding due to such strategic disinvestment."




A press released by the CBDT stated, "Finance Act, 2021 has amended section 72A of the Income-tax Act, 1961 (the Act) to inter alia provides that in case of an amalgamation of a public sector company (PSU) which ceases to be a PSU (erstwhile public sector company), as part of strategic disinvestment, with one or more company or companies, then, subject to the conditions laid therein, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss, or as the case may be, allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected."

To fulfill the strategic disinvestment, CBDT has come to the conclusion that Section 79 of the Income-tax Act, 1961, will not apply to an erstwhile public sector company which has become so as a result of strategic disinvestment. Accordingly, losses 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 statement further read, "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, 51 per cent of the voting power of the erstwhile public sector company."


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income tax department finance ministry