Eligible Assessee:
As per the Provision of Section 35DD, it is applicable to Only Resident Companies.
Meaning of Amalgamation:
The term ‘amalgamation’ is defined under section 2(1B) of the Income Tax Act. In simple terms, amalgamation means merger of two or more companies in to a new entity in a specified manner.
Meaning of Demerger:
The term ‘demerger’ is defined under section 2(19AA) of the Income Tax act. Putting up simply, demerger is a form of corporate restructuring, wherein, the company transfers one or more of the business undertaking to another company.
Eligible Expenditure under the section 35DD:
- The Assessee, claiming the deduction, should be an Indian company.
- Expenditure should have been incurred, wholly and exclusively, for the purpose of amalgamation or demerger of an undertaking.
- Expenditure should have been incurred on or after 1st April 1999.
Quantum of Deduction under section 35DD
The allowable amount of deduction
- The entire eligible expenditure will be amortized.
- The amortized amount will be allowed as a deduction in five equal instalments.
- The first deduction will be available from the previous year in which the amalgamation/ demerger took place.
- The expenditure allowed as a deduction under section 35DD of the Income Tax Act will not be allowed under any other provisions of the Act.
