Page 299 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning Manpreet Kaur, Lovely Professional University

Notes Unit 13: Tax Treatment for Business Restructuring

CONTENTS

Objectives
Introduction
13.1 Business Restructuring
13.1.1 Types of Business Restructuring
13.1.2 Advantages and Disadvantages of Business Restructuring
13.2 Amalgamations
13.2.1 Definition as per Income Tax, 1961

13.2.2 Reasons behind Mergers and Amalgamation
13.2.3 Tax Implication of Mergers and Amalgamations
13.3 Demerger
13.4 Summary
13.5 Keywords
13.6 Review Questions

13.7 Further Readings

Objectives

After studying this unit, you will be able to:
State the meaning and scope of business restructuring

Discuss the types of business restructuring
Explain the concept of amalgamation and its various tax treatments under Income Tax Act,
1961

Elucidate the concept of demerger and its tax implications
Introduction

Business restructuring is the process of rearrangement of business activities and has become the
buzzword to cope with the fierce competitive environment prevailing all throughout the globe in

the era of globalisation and liberalisation.
To face the growing challenges, the corporate entities are under sheer pressure to go for redefi ning
their strategies on a continuous move based on their core competencies and market excellences
to enter into new venture resulting corporate restructuring. The Income tax laws have been eager

to cater different tax exemptions to give fillips to such reorganisations for the noble mission to

protect corporate entities from the fierce competitions as well as to help them survive and grow
for the greater interests of the society at large.
In thus unit, we will focus of few very important forms of business restructuring from the point
of view of their tax implications. However, the main area of our concern will be merger and
amalgamations and demergers.

294 LOVELY PROFESSIONAL UNIVERSITY