Cost of Acquisition u/s 112A for Demerged Shares

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Roger (Querist)
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09 July 2023 A) What would be the Cost of Acquisition (COA) u/s 112A for the resulting company shares in a demerger which was approved and executed after 1st April 2018, when the demerged company shares were bought before 31st January 2018.

B) Further how will the COA be calculated for the demerged company shares when sold later than 1st April 2018.

Example: Kkalpana industries shares (say Qty 100) were bought on 27th March 2017 for Rs. 31.69. The company got demerged and Ddev Plastiks shares of equal quantity (Qty 100) were issued and listed on the stock exchange on 26th July 2022. The original quantity of shares in Kkalpana industries remained the same (Qty 100) even after the demerger. Fair Market Value (FMV) of Kkalpana industries (demerged company) was Rs. 41.45 as on 31st January 2018. DDev Plastik shares (resulting company) were sold on 5th January 2023 for Rs. 91.56.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 July 2023 What were the prices of shares of both the companies as on listing date, i.e. 26th July, 2022? Take the ratio of prices to determine proportionate rate as on 31.01.2018, as their COA.

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