Additional criteria that the resulting company needs to meet in a demerger for the purpose of set-off and carry forward of losses and depreciation allowances [ Section 72A(4)&(5) ] - Income Tax - Ready Reckoner - Income Tax

Other following condition required to be fulfill in case of demerger by the resulting company for set off and carry forward of loss and allowance for depreciation [ Section 72A(4) (5) ] Notwithstanding anything contained in any other provisions of this Act , in the case of a demerger, the accumulated loss and the allowance for unabsorbed depreciation of the demerged company shall- ( a ) where such loss or unabsorbed depreciation is directly relatable to the undertakings transferred to the resulting company, be allowed to be carried forward and set off in the hands of the resulting company ; ( b ) where such loss or unabsorbed depreciation is not directly relatable to the undertakings transferred to the resulting company, be apportioned between the demerged company and the resulting company in the same proportion in which the assets of the undertakings have been retained by the demerged company and transferred to the resulting company, and be allowed to be carried forward and set off in the hands of the demerged company or the resulting company, as the case may be. [ Section 72A(4) ] The Central Government may, for the purposes of this Act, by notification in the Official Gazette, specify such conditions as it considers necessary to ensure that the demerger is for genuine business purposes. [ Section 72A(5) ]