TaxBuzz | Demerger expenses allowable u/s 35DD to resulting company – Delhi HC July 11, 2021
Published in: TaxBuzz
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We are pleased to share with you a copy of our in-house publication – “TaxBuzz…”, wherein we have analysed the recent ruling of the Delhi High Court in the case of Coforge Ltd. The High Court, while reversing the decision of the Tribunal, held that demerger expenses under section 35DD of the Income Tax Act, 1961 are allowable to, not only the ‘demerged company’, but also the ‘resulting company’. The said ruling, being the first of its kind from any High Court, will provide significant relief for corporate restructuring, since amalgamation/ demerger expenses incurred by the amalgamated/ resulting company, could now conclusively be claimed as allowable.
Various facets of the legal device of demerger as well as commercial aspects of business restructuring have been examined from the perspective of allowability under section 35DD of the Income Tax Act, 1961 in this well-reasoned ruling of the High Court.
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