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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Corporate Tax Planning

Under section 116 of the Income-tax Act, 2025, the amalgamated company must hold continuously for a minimum period from the date of amalgamation at least a stated fraction of the book value of fixed assets acquired from the amalgamating company. Which is correct?

The amalgamated company must hold at least three-fourths of the book value of the amalgamating company's fixed assets acquired in the scheme continuously for a minimum of five years from the date of amalgamation. The three-year period relates to how long the amalgamating company carried on the loss-making business.

  1. AThree-fourths of book value for five yearsCorrect
  2. BThree-fourths of book value for three years
  3. COne-half of book value for five years
  4. DFull book value for two years

Explanation

Section 116(4)(b)(i) requires the amalgamated company to hold at least three-fourths of the book value of the fixed assets acquired for a minimum of five years from the date of amalgamation. The three-year figure applies to the amalgamating company's prior business period, not to this holding condition.

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