Demerger loss carryforward allows resulting company to inherit directly relatable losses or apportions others between companies. Where accumulated loss or unabsorbed depreciation is directly relatable to transferred undertakings, it may be carried forward and set off in the hands of the resulting company. If not directly relatable, the loss or depreciation is apportioned between the demerged and resulting companies in the same proportion as assets retained and transferred, and each company may carry forward and set off its allocated portion. The Central Government may notify conditions to ensure the demerger is for genuine business purposes.