ITAT allowed the assessee's appeals, rejecting the claim that ...

Assets Transfer Doesn't Qualify as Demerger: Tribunal Validates Transaction Methodology and Computational Approach for Tax Purposes

April 12, 2025

Case Laws     Income Tax     AT

ITAT allowed the assessee's appeals, rejecting the claim that the transfer of assets through a restructuring scheme constituted a demerger under section 2(19AA). The tribunal found the transaction was a specific asset transfer to liquidate debts, not meeting demerger criteria. The assets were transferred at fair market value, with the land sold at Rs. 65 crores against an indexed cost of Rs. 68.32 crores, and shares transferred to settle liabilities. The tribunal upheld the assessee's method of recording transactions, deleted disallowances related to notional interest on inter-group loans, section 14A provisions, and staff welfare expenses, essentially ruling in favor of the assessee's computational approach and commercial rationale.

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