Tax implications or benefits of Amalgamation or demerger
a) For expenses falling u/s 35 BB (telecommunication license), or 35D (preliminary expenses), or 35 DDA (voluntary retirement) or 35 E/42 (prospecting for mineral oils), the expenditure remaining unallowed can be claimed as deduction by the amalgamating company.
b) Expense on amalgamation/demerger is allowable in 5 equal annual installments us 35DD.
c) Deemed profits u/s 41(1) are taxed in the hands of the amalgamated or resulting company.
d) Actual cost of asset transferred or WDV of block transferred in the hands of the transferor, is taken to be the actual cost or WDV in the hands of the transferee company.
e) Transfer of capital assets in course of amalgamation/ demerger is exempt from capital gains.
f) Transfer of shares held in amalgamating company/demerged company by the shareholder for issue of shares in amalgamated / resulting company is exempt from capital gains.
g) Unabsorbed business losses and unabsorbed depreciation is case of transferor-company are allowed to be c/f by the transferee company u/s 72A. h) The deductions allowable u/s 80I-A to 80-IC and 10A, 10AA or 10B continue to remain allowed to the amalgamated/resulting company.