What is meant by demerger? Differentiate it with the slump sale.

'Demerger' is a form of corporate restructuring in which the entity's business operations are segregated into one or more components. In simple words, it means division or separation of different undertakings of a business functioning under a common corporate umbrella, it is in fact a corporate partition of a company in two undertakings. A demerger is often done to help each of the segments operate more smoothly, as they can focus on a more specific task after demerger. Demerger under section 2(19AA) of the Income-tax Act, 1961 means the transfer, pursuant to a scheme of arrangement under section 230 to 232 of the Companies Act, 2013, by a demerged company of its one or more undertakings to the resulting company. 'Slump sale' is transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities. If a company sells or disposes of the whole or substantially the whole of its undertaking for a predetermined lump sum consideration called slum price, then it results in a slump sale. Section 2(42C) of the Income-tax Act, 1961, recognizes 'slump sale' as a transfer of an 'undertaking' i.e. a part or a unit or a division of a company, which constitutes a business activity when taken as a whole. Sale includes transfer of an asset from one person to another for some consideration, where consideration can be in kind or in cash. The conceptual difference lies in the valuation methodology and the end purpose to be achieved for the specific action taken.