Tax Implications in the Hands of Successor / Resulting Company

Business reorganizations have always been of vital importance for any entity to meet certain needs, expand the business, etc. and have risen over time to explore various opportunities. The drivers that create interest in various forms of restructuring could be internal or external. Equally important is the tax aspect of such business reorganization.

The judiciaries have given importance to the law of succession while interpreting the tax implications in the hands of the successor. In the present article, we have dealt with the tax implications in the hands of the successor / resulting company and the benefits that can be passed on to the resulting company.

The Apex Court has laid down certain principles as a law of succession, which acts as a guide to assess the implications under various scenarios. In the case of succession through amalgamation, the SC¹ has held that although the outer shell of the entity is destroyed in case of amalgamation, the corporate venture continues to exist in the form of a new or the existing transferee entity. The SC in another decision² emphasized the point that the successor-in-interest becomes eligible to all the entitlements and deductions which were due to the predecessor firm subject to the specific provisions con