Flying Ltd. got demerged and the resulting company Soars Ltd. was formed. It was a demerger within the meaning of section 2(19AA) of the Income-tax Act, 1961. Your advice is sought by Flying Ltd. regarding the tax conces

If a demerger takes place within the meaning of section 2(19AA) of the Income-tax Act, 1961, the following tax concessions shall be available to the demerged company: Capital Gains Tax Not Attracted [Section 47(vib)]: According to section 47(vib), where there is a transfer of any capital asset in case of a demerger by the demerged company to the resulting company, such transfer will not be regarded as a 'transfer' for the purpose of capital gain, provided the resulting company is an Indian company. Tax Concession to a Foreign Demerged Company [Section 47(vic)]: Where a foreign company holds any shares in an Indian company and transfers the same, in case of a demerger, to another resulting foreign company, such transaction will not be regarded as a 'transfer' for the purpose of capital gain under section 45 if the following conditions are satisfied: At least seventy-five per cent of the shareholders of the demerged foreign company continue to remain shareholders of the resulting foreign company; and Such transfer does not attract tax on capital gains in the country in which the demerged foreign company is incorporated. Reserves for Shipping Business: Where a ship acquired out of the reserve is transferred in a scheme of demerger, even within the period of eight years of acquisition, there will be no deemed profits to the demerged company.