demerger

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Querist : Anonymous

Querist : Anonymous (Querist)

09 June 2011 Can anybody help me with the indexation issue of demerger. Will the resulting company in case of demerger get the benefit of indexation for the period of holding of demerged company? pls provide supporting case laws.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

09 June 2011 In case we follow the definition of "indexed cost of acquisition" strictly as given vide Explanation (iii) to Section 48, indexation is allowed in respect of the first year in which the asset was held by the assessee.
As demerged Company and resulting company are two different assessees, and holding period's first year, in case of "resulting company assessee" starts from the day when assets are first brought in it as a result of demerger.

The limitation of this opinion is due to the pure language of the Act without interpreting it in the context of purpose of indexation.

Querist : Anonymous

Querist : Anonymous (Querist)

14 June 2011 Can you please provide your opinion in the context of purpose of indexation citing case laws?

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