Income Tax Act, 2025
Section 8: Ins. by Act 27 of 1999, s. 3 (w.e.f. 12000).
8. Ins. by Act 27 of 1999, s. 3 (w.e.f. 12000).
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(ii) all the liabilities relatable to the undertaking, being transferred by the demerged company,
immediately before the demerger, become the liabilities of the resulting company by virtue of the
demerger;
(iii) the property and the liabilities of the undertaking or undertakings being transferred by the
demerged company are transferred at values appearing in its books of account immediately before
the demerger;
(iv) the resulting company issues, in consideration of the demerger, its shares to the
shareholders of the demerged company on a 1[proportionate basis except where the resulting
company itself is a shareholder of the demerged company];
(v) the shareholders holding not less than three-fourths in value of the shares in the demerged
company (other than shares already held therein immediately before the demerger, or by a
nominee for, the resulting company or, its subsidiary) become share-holders of the resulting
company or companies by virtue of the demerger,
otherwise than as a result of the acquisition of the property or assets of the demerged company or any
undertaking thereof by the resulting company;
(vi) the transfer of the undertaking is on a going concern basis;
(vii) the demerger is in accordance with the conditions, if any, notified under sub-section (5)
of section 72A by the Central Government in this behalf.
Explanation 1.—For the purposes of this clause, “undertaking” shall include any part of an
undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does
not include individual assets or liabilities or any combination thereof not constituting a business
activity.
Explanation 2.—For the purposes of this clause, the liabilities referred to in sub-clause (ii), shall
include—
(a) the liabilities which arise out of the activities or operations of the undertaking;
(b) the specific loans or borrowings (including debentures) raised, incurred and utilised solely
for the activities or operations of the undertaking; and
(c) in cases, other than those referred to in clause (a) or clause (b), so much of the amounts of
general or multipurpose borrowings, if any, of the demerged company as stand in the same
proportion which the value of the assets transferred in a demerger bears to the total value of the
assets of such demerged company immediately before the demerger.
Explanation 3.—For determining the value of the property referred to in sub-clause (iii), any
change in the value of assets consequent to their revaluation shall be ignored.
Explanation 4.—For the purposes of this clause, the splitting up or the reconstruction of any
authority or a body constituted or established under a Central, State or Provincial Act, or a local
authority or a public sector company, into separate authorities or bodies or local authorities or
all the liabilities relatable to the undertaking, being transferred by the demerged company,
immediately before the demerger, become the liabilities of the resulting company by virtue of the
demerger;
the property and the liabilities of the undertaking or undertakings being transferred by the
demerged company are transferred at values appearing in its books of account immediately before
the demerger;
the resulting company issues, in consideration of the demerger, its shares to the
shareholders of the demerged company on a 1[proportionate basis except where the resulting
company itself is a shareholder of the demerged company];
the shareholders holding not less than three-fourths in value of the shares in the demerged
company (other than shares already held therein immediately before the demerger, or by a
nominee for, the resulting company or, its subsidiary) become share-holders of the resulting
company or companies by virtue of the demerger,
otherwise than as a result of the acquisition of the property or assets of the demerged company or any
undertaking thereof by the resulting company;
the transfer of the undertaking is on a going concern basis;
the demerger is in accordance with the conditions, if any, notified under sub-section
of section 72A by the Central Government in this behalf.
Explanation 1.—For the purposes of this clause, “undertaking” shall include any part of an
undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does
not include individual assets or liabilities or any combination thereof not constituting a business
activity.
Explanation 2.—For the purposes of this clause, the liabilities referred to in sub-clause
the liabilities which arise out of the activities or operations of the undertaking;
the specific loans or borrowings (including debentures) raised, incurred and utilised solely
for the activities or operations of the undertaking; and
in cases, other than those referred to in clause
or clause