Capital Gain on Mergers

[JOHN SHANNEL]

Is there Capital Gain applicable when a Wholly owned Subsidiary company gets merged with its Holding company.

John Shannel

[Guest]

Under Sec 45 of Capital Gain Chapter..transfer of capital asset by a subsidiary Company to its holding company is not regarded as transfer,provided it is wholly owned subsidiary and the holding company is Indian. Also the asstes are not transfered as stock in Trade.

AI Summary

Capital gain treatment: merger of wholly owned subsidiary into Indian holding company not treated as transfer under Sec 45. A merger in which a wholly owned subsidiary is absorbed by its Indian holding company is not regarded as a taxable transfer of capital assets, and the assets are not treated as stock-in-trade; consequently no capital gain arises under the capital gains provisions where those conditions are met.