Section 72AB applies to business reorganisations of co-operative banks. Where an amalgamation takes place during the previous year, the successor co-operative bank may set off the accumulated loss and unabsorbed depreciation of the predecessor co-operative bank as if the amalgamation had not taken place. On a demerger, the resulting co-operative bank gets the whole of the loss or depreciation that is directly relatable to the undertakings transferred; otherwise it gets the proportion that the assets transferred bear to the assets of the demerged bank.
The section applies only if the predecessor bank has carried on banking for three or more years and has held at least three-fourths of the book value of its fixed assets continuously for two years before the reorganisation, and the successor bank holds at least three-fourths of the book value of the fixed assets acquired, and continues the business, for a minimum of five years, and meets any prescribed conditions. The Central Government may notify further conditions. The expressions used take their meanings from s. 44DB.
Operative consequences
The previous year is split at the date of reorganisation: the two periods are deemed to be two different previous years for set-off and carry forward (s. 72AB(5)).
If the conditions in sub-section (2), or those notified under sub-section (4), are not complied with, the set-off allowed in any earlier year is deemed to be the successor bank's income for the year of non-compliance (s. 72AB(6)).
"Accumulated loss" excludes speculation loss and is limited to what the amalgamating or demerged bank could have carried forward under s. 72.
Under the 2025 Act, a set-off allowed before 1 April 2026 under s. 72AB is deemed income under that Act in the year a condition is breached (s. 536(2)(p)).
Status
Operative for assessment year 2026-27. Not omitted and not time-limited. The Finance Act, 2026 does not amend s. 72AB.
The Income-tax Act, 1961 governs assessment year 2026-27 and earlier years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject, the corresponding provision is s. 118.
Function in the statutory architecture
Section 72AB applies to business reorganisations of co-operative banks. Where an amalgamation takes place during the previous year, the successor co-operative bank may set off the accumulated loss and unabsorbed depreciation of the predecessor co-operative bank as if the amalgamation had not taken place. On a demerger, the resulting co-operative bank gets the whole of the loss or depreciation that is directly relatable to the undertakings transferred; otherwise it gets the proportion that the assets transferred bear to the assets of the demerged bank.
The section applies only if the predecessor bank has carried on banking for three or more years and has held at least three-fourths of the book value of its fixed assets continuously for two years before the reorganisation, and the successor bank holds at least three-fourths of the book value of the fixed assets acquired, and continues the business, for a minimum of five years, and meets any prescribed conditions. The Central Government may notify further conditions. The expressions used take their meanings from s. 44DB.
Operative consequences
Status
Operative for assessment year 2026-27. Not omitted and not time-limited. The Finance Act, 2026 does not amend s. 72AB.
The Income-tax Act, 1961 governs assessment year 2026-27 and earlier years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject, the corresponding provision is s. 118.