Amalgamation

16 Questions

S Ltd. is absorbed by P Ltd. Calculate the purchase consideration from the following information : (a) The payment of cost of absorption as a part of purchase consideration not exceeding Rs.25,000 (actual cost Rs.20,000). (b) The payment of the existing 11% Debentures of Rs.3,00,000 at a premium of 10% by issue of 12% Debentures in.

The purchase consideration can be calculated using the formula: Purchase Consideration = Cost of acquisition + Liabilities assumed - Assets taken over. In this case, the cost of acquisition includes the payment of cost of absorption and the payment of existing debentures. The formula for the purchase consideration will be: Purchase Consideration = Rs.20,000 + Rs.3,00,000 + (Rs.3,00,000 * 10%) - 25,000. Solving this equation gives the purchase consideration.

What is the total purchase consideration if the cost of acquisition is Rs.20,000, liabilities assumed are Rs.3,00,000, assets taken over are Rs.3,00,000, and the payment of cost of absorption does not exceed Rs.25,000?

Using the formula, [ Purchase Consideration = Rs.20,000 + Rs.3,00,000 - Rs.3,00,000 - 25,000 ], the total purchase consideration can be calculated.

What is the formula for calculating the purchase consideration when one company is absorbed by another?

The formula for purchase consideration when one company is absorbed by another is: [ Purchase Consideration = Cost of acquisition + Liabilities assumed - Assets taken over ]

When are calls only accepted at CA. Naresh Aggarwal’s ACADEMY of ACCOUNTS?

Calls are only accepted between 3.00 pm to 8.00 pm at CA. Naresh Aggarwal’s ACADEMY of ACCOUNTS. For enquiries via Whatsapp, they can be contacted anytime.

What is the payment of the existing 11% Debentures of Rs.3,00,000 at a premium of 10% by issue of 12% Debentures in the context of absorption?

The payment of the existing 11% Debentures of Rs.3,00,000 at a premium of 10% by issue of 12% Debentures means that the company is issuing new debentures at a premium to replace the existing debentures. The premium is the additional amount paid over the face value of the debentures.

What is the email address for enquiries at CA. Naresh Aggarwal’s ACADEMY of ACCOUNTS?

The email address for enquiries at CA. Naresh Aggarwal’s ACADEMY of ACCOUNTS is [email protected]

Explain the concept of self-assessment under section 140A of the Income Tax Act.

Self-assessment under section 140A means that the taxpayer calculates their own tax liability and files the Income Tax Return (ITR) after payment of the self-calculated tax. It is the first step in the assessment process and exists to make the work easier for the taxpayer. No assessment order is given because the assessment is not done by the department.

Explain the concept of summary assessment under section 143(1) of the Income Tax Act.

Summary assessment under section 143(1) is a preliminary assessment done by the income tax department based on the return filed by the taxpayer. It is not a detailed assessment and is usually done to check for any arithmetic errors, calculation mistakes, or any apparent inconsistencies.

What are the different ways in which an assessee can file ITR as self-assessment under section 139 of the Income Tax Act?

The assessee can file ITR as self-assessment under section 139 by filing the return with the due date, as a belated return, as a return of loss, in response to notice under section 142(1) or 148 or 153A, or when the return has been filed and a refund is due.

What is the process of scrutiny assessment under section 143(3) of the Income Tax Act?

Scrutiny assessment under section 143(3) is a detailed examination of the taxpayer's return by the income tax department. It involves a thorough review of the return and may require the taxpayer to provide additional information or documents to support the claims made in the return.

Define best judgment assessment under section 144 of the Income Tax Act.

Best judgment assessment under section 144 is done when the assessing officer is not satisfied with the accounts and documents furnished by the taxpayer. In such cases, the assessing officer makes the assessment to the best of their judgment based on the available information.

What is the first step in the process of assessment under the Income Tax Act?

Self-assessment under section 140A

Under which section of the Income Tax Act does the assessee calculate their own tax liability and income, and file ITR accordingly?

Section 140A

In which scenarios can an assessee file ITR as self-assessment under section 139 of the Income Tax Act?

In response to notice under section 142(1) or 148, or when return has been filed and refund is due

What is the purpose of the system of self-assessment under the Income Tax Act?

To avoid the need for assessment order by the department

Which assessment under the Income Tax Act is done by the department without the assessee's involvement?

Summary assessment under section 143(1)

Study Notes

Company Absorption

S Ltd. is absorbed by P Ltd.
Cost of absorption is Rs. 20,000, but payment is limited to Rs. 25,000.
Liabilities assumed by P Ltd. are Rs. 3,00,000.
Assets taken over by P Ltd. are Rs. 3,00,000.

Calculation of Purchase Consideration

Formula: Purchase consideration = Cost of acquisition + Liabilities assumed - Assets taken over
Purchase consideration = Rs. 20,000 + Rs. 3,00,000 - Rs. 3,00,000

Debentures

Existing 11% Debentures of Rs. 3,00,000 are paid off at a premium of 10% by issuing 12% Debentures.

CA. Naresh Aggarwal's ACADEMY of ACCOUNTS

Calls are only accepted at CA.
Email address for enquiries: [Not specified]

Income Tax Act

Self-Assessment (Section 140A)

Assessee calculates their own tax liability and income.
Assessee files ITR accordingly.

Summary Assessment (Section 143(1))

Assessment done by the department without the assessee's involvement.
No scrutiny is done.

Filing ITR (Section 139)

ITR can be filed online.
ITR can be filed physically.
ITR can be filed through a tax return preparer.
Scenarios where ITR can be filed: Salary income, interest income, capital gains, etc.

Scrutiny Assessment (Section 143(3))

Detailed scrutiny of the assessee's returns.
Verification of the accuracy of the returns.

Best Judgment Assessment (Section 144)

Assessment done by the department based on their best judgment.
Done when the assessee does not provide necessary information.

Process of Assessment

First step: Filing of ITR by the assessee.
The department verifies the returns and conducts scrutiny or summary assessment.

Purpose of Self-Assessment

To ensure accurate tax calculation and payment by the assessee.
To reduce the burden on the department.

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