Amortization of expenditure of Amalgamation or Demerger

Introduction

The expenditure incurred by an Indian company for the purpose of amalgamation or demerger is allowed as deduction in five equal instalments in five successive years.

1. About

1.1. Who can claim this deduction?

If an Indian company incurs any expenditure for the purpose of amalgamation or demerger, it is allowed as deduction.

1.2. How much deduction is allowed?

Entire expenditure incurred in respect of amalgamation or demerger is allowed as deduction in 5 equal installments in five successive years. The first instalment is deductible in the tax year in which amalgamation or demerger takes place.

However, in case of amalgamation or demerger of co-op. banks, the amount of deduction so determined shall be allowed to both, in the year in which amalgamation or demerger takes place, the transferor (amalgamating or demerged co-op. bank) and transferee (amalgamated or resulting co-op. bank) proportionately. In subsequent years, the transferee shall be entitled to claim the deduction for the unexpired period.

Where any deduction is claimed and allowed, in respect of the aforesaid expenditure, in this provision, no deduction is allowed in respect of such expenditure under any other provisions of this Act.

This article is general information and not tax advice. Provisions change. Confirm your position with a qualified professional before acting.