Tax Planning relating to Demerger of Companies
TAX PLANNING WITH RESPECT TO AMALGAMATION Demerger: A demerger is a form of Corporate Restructuring whereby one or more business undertakings of a company are transferred, either to a newly formed company or to an existing company, and the remainder of the company's undertaking continues to be vested in that company. As per Section 2(19AA) of Income Tax Act,1961 "Demerger" means the transfer of one or more Undertakings to any Resulting Company in such a manner that: All the property / liability of the undertaking becomes the properties / liabilities of Resulting Company. All the properties / liabilities are transferred at Book Value. The Resulting Company issues shares to the Shareholders of the Demerged Company on a Proportionate basis. The Shareholders holding at least 75% of the value of shares in Demerged Company become Shareholders of the Resulting Company. The transfer of an undertaking is on a Going Concern Basis. The Demerger is in accordance with the condition...