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CMA Final · Direct Tax Laws and International Taxation · Assessment of Companies

Under section 314 of the Income-tax Act, 2025, which of the following statements about the meaning of terms is correct?

Business reorganisation means reorganisation involving the amalgamation, demerger or merger of the business of one or more persons. The relevant order can come from a High Court, tribunal or insolvency Adjudicating Authority, and a successor includes resulting companies whether or not they existed before.

  1. AOrder in respect of business reorganisation means only an order of a High Court
  2. BSuccessor means only a resulting company that existed before the reorganisation
  3. CBusiness reorganisation includes amalgamation, demerger or merger of business of one or more personsCorrect
  4. DBusiness reorganisation excludes any order of an Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016

Explanation

Section 314(4) defines business reorganisation as reorganisation involving amalgamation, demerger or merger of business of one or more persons. The order may be of a High Court, a tribunal or an Adjudicating Authority under the Insolvency and Bankruptcy Code, and successor covers all resulting companies whether or not existing earlier. The other statements contradict these definitions.

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