Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: VAT RATES :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARDS :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: cpt :: due date for vat payment
« News Headlines »
 India is moving towards a flawed GST
 ICAI to organise two-day international conference in Hyderabad
 Here's how to calculate tax payable on your capital gains
 Income Tax calculations for the financial year 2016-17
 CPE Events 17 October - 22 October 2016
 High Court raps I-T Department for wrong tax demand
  CBDT signs 5 advance pricing pacts with Indian taxpayers
 Finance ministry warns tax officials of action against GST protest
 Big changes for small units under GST
 Parliament’s winter session to begin on November 16 to expedite GST rollout
 Income-tax (27th Amendment) Rules, 2016 - 92/2016

IA, A-I merger may get a special tax dispensation
October, 16th 2006

The government may promulgate an Ordinance for according a special dispensation to the proposed merger of Indian Airlines and Air-India and allowing the new entity claim income tax benefits on carry forward of accumulated losses.

According to government sources, section 72A of the Income Tax Act allows accumulated losses and unabsorbed depreciation of a sick industrial undertaking to be set off against the profits of a healthy company after a merger. At present, the Act does not specifically extend the set-off benefits to airline mergers.

Accenture, a global consultant evaluating the proposed merger of the two airlines, had studied all options, including even a de-merger. Two of the options being discussed by the Indian Airlines and Air-India boards are: floating a third company, to which the assets of IA and A-I can be leased, and merging IA into A-I.

If a new company is floated, A-I and IA can retain their assets or even lease them to the new company at nominal rates, thus avoiding payment of stamp duty. For a merger, the two companies will have to go through the rigmarole of paying stamp duty to various states, where their fixed assets are located. A re-valuation of assets before merger is also bound to increase their value significantly, forcing the two companies to pay huge stamp duties.

The Ordinance will be particularly beneficial under the second option of IA merging into A-I. IA, the sources said, had accumulated losses of over Rs 800 crore and had huge unabsorbed depreciation. A-I, on the other hand, has a positive net worth of Rs 553 crore. If IA is merged into A-I, then A-I can claim tax benefits under Section 72A, if the Section is made applicable to a merger of state-owned carriers.

The sources pointed out that a special dispensation was given when Global Trust Bank was merged with state-owned Oriental Bank of Commerce. Appropriate amendments to the I-T Act by introducing Section 72AA in the Budget. Since there was a precedence, a similar dispensation for Indian Airlines merger with Air-India would not be difficult, they added.

Accenture has estimated the merger cost at about Rs 250 crore during the first two years. The sources, however, said it could be much higher if the salaries of the two airlines had to be synchronised and wage arrears taken into account.

The merged entity would be able to fly more sectors and have a wider network. Accenture has, however, not put a value to the benefits .

The ministry was likely to firm up an option within the next month or two, the sources said. Civil aviation minister Praful Patel is keen to complete the exercise in the current financial year.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Quality Assurance Services Testing and Re-testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions