TaxTMI 
TaxTMI 
TaxTMI 
Tax Implications of Demerger
manoj gupta
A Pvt. Ltd. company demerges into two companies. It transfers its stock of gold to two companies at book values. what are the tax implications of this. Pls. clarify.
Demerger Gold Transfer at Book Value Spurs Tax Questions under Sections 47 and 43 of Income Tax Act A private limited company undergoing a demerger transferred its stock of gold to two resulting companies at book value, raising questions about tax implications. One respondent asked whether the gold was held as stock in trade or as a capital asset, highlighting that under certain conditions, a demerger transfer might not be considered a transfer for tax purposes according to section 47 of the Income Tax Act. Another explanation referenced section 43, emphasizing that the actual cost of a transferred capital asset should not exceed its written-down value in the demerged company's records. The gold was confirmed to be held as stock in trade. (AI Summary)