CORPORATE RESTRUCTURING - RECONSTRUCTION & REVERSE MERGER

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..... nt proposed between a company and any such persons as are mentioned in that section, and it is shown to the Tribunal that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies, or the amalgamation of any two or more companies the Tribunal may, either by the order sanctioning the compromise or arrangem .....

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..... with a financially weak company. The main reason for this type of reverse merger is the tax savings under the Income- Tax, 1961. Section 72A of the Income Tax Act ensures the tax relief, which becomes attractive for such reverse mergers, since the healthy and profitable company can take advantage of the carry forward losses/of other company. The healthy units lose its name and surviving sick comp .....

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..... d Gains from business or Profession" and not be loss under the head" Capital Gains" or " Speculation' * After amalgamation the "sick" company shall survive and the other income generating company shall extinct. * One of the merger partner should be financially unviable and have accumulated losses to qualify for the merger and the other merger partner should be profit earning so that tax relief .....

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