“resulting company”
The decision most relied on for resulting company is Punjab State Industrial Development Corporation Ltd. v. CIT (225 ITR 792), cited in 158 judgments on BharatTax.
Leading authorities on resulting company
Expenditure incurred for increasing a company's share capital, such as expenses related to issuing shares or an initial public offering (IPO), is capital expenditure. Such expenses are not allowable as a revenue deduction under Section 37, even if they incidentally benefit the business, because they result in an increase in capital.
An assessment framed in the name of a company that has ceased to exist due to amalgamation is invalid, even if the amalgamated company participated in the proceedings. Such a defect cannot be cured under section 292B of the Income-tax Act.
For Minimum Alternate Tax (MAT) under Section 115JB, the book profit must reflect the true working results of the company. Capital receipts that are not income cannot be included in book profit, and adjustments based on notes on accounts can be made to arrive at the real profit.
The issuance of bonus shares by capitalizing profits does not result in an increase in the company's capital employed or an expansion of its profit-making apparatus.
A subsidiary is an independent legal entity, and the mere relationship of holding-subsidiary or control by itself does not result in a Permanent Establishment (PE) for the foreign company in India, whether it be a fixed place PE or a dependent agent PE, even when the subsidiary provides outsourced services.
Depreciation is allowable on goodwill as an intangible asset under Section 32(1)(ii) when it arises from a scheme of amalgamation or similar corporate restructuring.
Expenses incurred on amalgamation, legal and professional fees, and contributions to a State Housing Board for worker tenements are considered revenue expenditure, not capital expenditure. This is because these expenditures do not result in an enduring benefit and are part of the company's operational costs.
The eligibility for deductions under sections 80-IB and 80-IA, and related issues like the initial assessment year, demerger, and resulting company status, are significant considerations in the context of company restructuring and tax benefits.
