Transfer of Asset by Demerged Company into Resulting Company

Certain Transactions not regarded as transfer

Section 47 (vib)

Transfer of a capital asset

by the demerged company to the resulting company

in a scheme of demerger

would not be regarded as a transfer,

if the resulting company is an Indian company.

When this Demerged company later sells these assets,

• ‘Cost of Acquisition of Demerged company =Cost of Acquisition of Resulting Company
• Cost of Improvement of both Demerged company and Resulting Company will be taken
• Period of holding of both Demerged and Resulting Company shall be taken into account.

Section 49(1)(iii)(e)

Effect of Amendment

Earlier, there were no express provisions regarding Cost of Acquisition and Cost of Improvement in case of Demerger of shares