COA of share held in demerged company

whether liab deducted while computing net book value of assets transferred in demerger.
Replies (4)
Quick Summary
This discussion clarifies the calculation of the Certificate of Acceptance (COA) for shares in a demerged company, specifically addressing whether liabilities should be deducted when computing the net book value of transferred assets. The consensus is that liabilities are not deducted from the net book value for this calculation, as the formula relies on net worth (equity components).

As per IndAS, a subsidiary has liabilities and recognised in the consolidated statements does not mean parent company will clear out the liabilities. Liabilities are consolidated and presented in the balance sheet for the investors interest in financial position of a group company. The subsidiary, a CGU, is a going concern/business entity which generates independent Cashflows to meet its liabilities. 

A parent sells off the firm to a party or to subsidiary itself. Then, the tax liability arising due to de merger or sale of CGU is borne by the parent. 

Sorry, but my concern is for computing COA of share of resulting company u/s 49(2C) whether to deduct liab while computing net book value of assets transferred in demerger?

Just like I suspected, net book value is the subsequent measurement of all tangible and intangible assets. 

No need to deduct liabilities from net book value because the formula requires Net worth (equity components) in the denominator. It is clearly explained here: https://incometaxmanagement.com/Pages/Tax-Ready-Reckoner/GTI/Capital-Gain/Deemed-Cost-of-Acquition-of-Asset-for-computing-Capital-Gain.H T M L

Thank u

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