Tax Planning

Demerger is an effective instrument of tax planning for corporate assessee. Advantages: 1) Benefits chthonic the various provisions of IT Act for all cases of Demerger: I.Resulting federation has the safe to carry forward and set off of accumulated evil and unabsorbed depreciation allowance of the demerged fraternity. -Sec 72A(4) II.Benefits of rebate u/s 10AA(5) 2) Benefits low the provision of IT Act for an Indian Company merging with some other Indian Company: I.Deductions u/s 80IA(12) & 80IB(12). Benefits under this piece are available to new industrial undertaking, ship, Hotel etc. and non to the owners of these undertakings. Where any undertaking of an Indian company is entitled to deduction under these sections is transferred before the expiry of the period specified in these sections to another Indian company in a organization of demerger the provisions of these sections so far as may be applied to the demerged company as they could have applied to the resulting company if the demerger had not taken place for the rest of the period. II.Amortization of original disbursement.

The resulting company is entitled to amortize the following capital expenditure or lump sum payments made by the demerged company for the residual period which remains after enjoyment of such right by the demerged company during the year or old age prior to the year of demerger. a)Capital expenditure on encyclopedism of patent or copyright -Sec 35A (7) b)Capital expenditure for obtaining license to operate telecommunication services. -Sec 35ABB (6) & 35ABB (7) c)Preliminary expenditure -Sec 35D (5) & 35D (5A) d)Expenditure on prospecting etc. for certain minerals. Sec 35E (7) & 35E(7A) e)Expenditure incurred for demerger. -Sec 35DD f)... If you want to hail a full essay, order it on our website: Orderessay

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