No capital gains on transfers in a demerger
The Mumbai Income-Tax Appellate Tribunal held that no capital gain tax is to be levied (absent any consideration received / accrued to the taxpayer) for transfers of undertakings under a plan of demerger. The tribunal observed that absent a connection between the transfer of the undertaking and the revaluation of the investment, neither can be considered as arising on account of the demerger, nor considered to be the full value of the consideration. The case is: Aditya Birla Telecom Limited. Read a November 2016 report [PDF 346 KB] of KPMG