Page 321 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes Amalgamation: It is a restructuring phenomenon in which two or more companies are liquidated
and a new company is formed to acquire business.
Business restructuring: It refers to a rearrangement of the corporate structure.
Copy rights: It is a legal concept, enacted by most governments, giving the creator of an original
work exclusive right to it, usually for a limited time.
Demerger: It is a form of corporate restructuring in which the entity’s business operations are
segregated into one or more components.
Joint Venture: Joint Venture is an entity formed by two or more companies for a specifi c period
with a specifi c objective.
Patent rights: These are the rights reserved exclusively to the inventor or the person to whom the
patent has been issued as per the law.

Reverse Merger: When financially weak company absorbs financially strong company it is

corporate restructuring made in the form of Reverse Merger.
Spin-off: It is a kind of restructuring in which a company distributes its shareholding in subsidiary
to its shareholders thereby not changing the ownership pattern.
Split-off: It is the form of demerger where shareholders of existing company form a new company

to takeover specific division of existing company.
Subdivision of shares: It is a strategy used to increase market price of share which is also type of
corporate restructuring.

13.6 Review Questions

1. Write short note on business restructuring.
2. Mention the different types of business restructuring.
3. Why do firms go for business restructuring?

4. What do you understand by amalgamation or merger as per Income Tax Act 1961?
5. Write a note on different form of mergers witnessed in Indian industries.

6. Mention the exemptions available under the Income-tax Act, 1961 in respect of mergers
and amalgamations.
7. Explain carry forward and set-off of accumulated loss and unabsorbed depreciation for
certain cases of amalgamation.
8. Mention the consequences of mergers.
9. Write short note on demerger.
10. Discuss the exemption and benefi ts that a fi rm gets while it demerges as per Income Tax
Act 1961.
11. Explain the treatment of set-off and carry forward of accumulated losses and depreciation
during demerger.

Answers: Self Assessment

1. Business restructuring 2. Amalgamation
3. Demerging 4. Split-off

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