Amalgamation of co.

Q1. XY Ltd. wants to amalgamate with PQ Ltd. on 30.6.2011 You are required to
find out the ta im!lications in res!ect of following losses " allowances of XY ltd. in
the assessment of XY ltd. i.e amalgamating com!an# and PQ ltd i.e. amalgamated
com!an#.
$na%sor%ed de!reciation allowance of !re&ious #ear 200'(06 )s. 36000"( %rought
forward %usiness loss of !re&ious #ear 200*(0+ )s. 1000000"(, una%sor%ed scientific
research e!enditure )s. 11000"( %ad de%ts )s. 1'000"( -a!ital gain arising on
transfer of assets to PQ Ltd. )s. 2'0000"( and %rought forward ca!ital loss )s.
.0000"( Also discuss whether PQ ltd can claim deduction u"s +0/A or +0 /0 in
res!ect of industrial underta1ing ta1en o&er from XY Ltd.
Q2. A Ltd and 0 Ltd. %oth %eing /ndian com!an# desire to merge together. At the
end of the financial #ear 2010(11 the !osition of losses and allowances in taation
are as under
A ltd. Pre&ious #ear $na%sor%ed %usiness loss $na%sor%ed de!reciation
2010(11 200000 300000
2002(10 2'0000
200+(02 100000
200*(0+ 300000 200000
2006(0* .00000 200000
0 ltd there was no loss or de!reciation remaining una%sor%ed at the end of P Y
2010(11.
As a ta consultant for %oth the com!anies ad&ise them as to the %asis and method
in which the merger should %e effected so as to reduce an# ad&erse ta effects to the
minimum. 3iscuss s!eciall# the !ro%lem of taation arising out of merger.
3iscuss chargea%ilit# of ta on ca!ital gains if an# in the hands of shareholders 4"or
com!anies.