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CS Professional · Advanced Direct Tax Laws and Practice · Income Tax Implication on Specified Transactions

Under section 116(4) of the Income-tax Act, 2025, one of the conditions for the amalgamated company to claim the amalgamating company's accumulated loss is that the amalgamated company holds continuously at least three-fourths of the book value of fixed assets of the amalgamating company acquired in the scheme. For how long must this be held, counted from the date of amalgamation?

The amalgamated company must hold at least three-fourths of the book value of the fixed assets acquired from the amalgamating company continuously for a minimum of five years from the date of amalgamation. It must also continue the amalgamating company's business for five years.

  1. ATwo years
  2. BThree years
  3. CFive yearsCorrect
  4. DEight years

Explanation

Section 116(4)(b) requires the amalgamated company to hold at least three-fourths of the book value of the acquired fixed assets continuously for a minimum of five years from the date of amalgamation, and to continue the business for five years. Two years is the look-back period for the amalgamating company's own holding, and eight years relates to the carry forward limit.

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