IT Act Non-Compliance Has No Bearing On Companies Act
Published on Tue, Aug 07,2012 | 22:51, Updated at Tue, Aug 07 at 22:55Source : Moneycontrol.com
The Hon’ble Delhi High Court vide its judgment dated July 23, 2012, in the case of Indo Rama Textile Ltd held that in a demerger, transfer of all common assets and/or liabilities relatable to undertaking being demerged is not required so long as the assets and liabilities transferred, by themselves, constitutes a running business and the business can be carried on uninterruptedly with such assets and liabilities alone.
The Court further held that compliance of Section 2(19AA) of the Income-tax Act, 1961 (“IT Act”) is relevant only for determining whether the demerger is tax neutral or not as per the IT Act and non-compliance of the same does not in any manner result in the arrangement not being regarded as a ‘demerger’ under Section 391 to 394 of the Companies Act, 1956 (“Companies Act”).
This M&A Alert by Nishith Desai Associates analyses this judgment by the Bombay HC.
Click on the accompanying attachment for more..