Demerger preserves tax continuity and non recognition of capital gains when statutory conditions and appointed date rules are satisfied. Demerger segregates one or more undertakings of an existing company into resulting company(ies) by transfer or share distribution; under the Companies Act, 1956 demerger is effected via schemes of compromise or arrangement (Sections 391-394), private spin outs or in voluntary winding up, with the appointed date identifying assets and liabilities. Income tax provisions preserve non recognition of capital gains and continuity of cost, depreciation, amortisation and loss allowances for resulting companies and shareholders where statutory conditions in Sections 47, 32, 35A/35AB/35ABB/35D/35DD, 43 and 72A are met.