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Relief for M&As, company rejigs on carrying forward losses

Relief for M&As, company rejigs on carrying forward losses

A tax tribunal has ruled that losses can be carried forward for eight years if the “effective” shareholding doesn’t change, an order that could impact several M&As and group restructuring exercises.

In case of any M&A or an internal group restructuring, if the effective shareholding of the major shareholders remains at least 51% even after the deal, losses in the merged entity can be used to set off future tax liabilities.

The Mumbai Appellate Tax Tribunal (ITAT) in its ruling in the case of Tata Realty said any deal has to see whether the ultimate shareholder continues to hold a similar stake after such a deal.

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