CBDT CIRCULAR NO.2/2018 [F.NO.370142/15/2017-TPL], DATED 15-2-2018
29. Cost of acquisition in Tax neutral demerger of a foreign company.
29.1 Section 47(vic) of the Income-tax Act provides that the transfer of shares of an Indian company by a demerged foreign company to a resulting foreign company will be not regarded as transfer.
29.2 Section 49 of the Income-tax Act has been amended to provide that cost of acquisition of the shares of Indian company referred to in section 47(vic) in the hands of the resulting foreign company shall be the same as it was in the hands of demerged foreign company.
29.3 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years.