Demerger rules define tax treatment for transfers of undertakings, preserving book values and mandating proportionate share distribution. The amendment defines demerger by listing operative conditions: transfer of all property and liabilities of the undertaking to the resulting company; transfer at values appearing in the books immediately before demerger; proportionate share issuance by the resulting company to shareholders of the demerged company; shareholder continuity threshold; transfer on a going concern basis; and compliance with conditions notified under section 72A. Explanations specify the meaning of 'undertaking', allocation of liabilities (including proportionate general borrowings), and ignore asset revaluation for value determination. Definitions of 'demerged company' and 'resulting company' and a definition of slump sale are also inserted.
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Provisions expressly mentioned in the judgment/order text.
Demerger rules define tax treatment for transfers of undertakings, preserving book values and mandating proportionate share distribution.
The amendment defines demerger by listing operative conditions: transfer of all property and liabilities of the undertaking to the resulting company; transfer at values appearing in the books immediately before demerger; proportionate share issuance by the resulting company to shareholders of the demerged company; shareholder continuity threshold; transfer on a going concern basis; and compliance with conditions notified under section 72A. Explanations specify the meaning of "undertaking", allocation of liabilities (including proportionate general borrowings), and ignore asset revaluation for value determination. Definitions of "demerged company" and "resulting company" and a definition of slump sale are also inserted.
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