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

Under the Income-tax Act, 2025, Alpha Ltd demerges an undertaking into Beta Ltd. Alpha's accumulated loss is Rs 90 lakh, of which Rs 30 lakh is directly relatable to the transferred undertaking. The remaining Rs 60 lakh is not directly relatable. Assets retained by Alpha are Rs 300 lakh and assets transferred to Beta are Rs 100 lakh. What loss is allowed to Beta?

Beta Ltd is allowed Rs 45 lakh. The directly relatable loss of Rs 30 lakh passes to Beta in full, and the non-relatable Rs 60 lakh is split in the ratio of assets retained to assets transferred (3:1), giving Beta Rs 15 lakh more.

  1. ARs 45 lakhCorrect
  2. BRs 30 lakh
  3. CRs 90 lakh
  4. DRs 60 lakh

Explanation

The directly relatable loss of Rs 30 lakh goes to Beta. The Rs 60 lakh not directly relatable is apportioned in the ratio of assets retained to assets transferred, which is 300:100 or 3:1, so Beta gets 1/4 of Rs 60 lakh = Rs 15 lakh. Total for Beta = 30 + 15 = Rs 45 lakh. Alpha keeps Rs 45 lakh. Choosing Rs 30 lakh ignores the apportioned part.

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