CII For Streamlining Clauses To Facilitate Corporate Restructuring

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New Delhi, January 9:: Confederation of Indian Industry (CII) has called for streamlining of additional conditions required to be met by entities involved in corporate restructuring through merger, de-merger and amalgamations to avail of fiscal incentives.

In its pre-budget memorandum, CII has pointed out that the Indian industry, particularly the manufacturing sector, is passing through a phase of consolidation. Companies are concentrating on their core areas and spinning off non-core areas. They are adding capacities by acquiring or merging with companies having product lines similar to their core areas.

Referring to the benefits available under section 10A and 10B of the Income-Tax Act, CII pointed out that sub-section 9 acts as an impediment in the way of restructuring of units established under the above provisions. Withdrawal of the benefits in case there is a change in shareholding pattern by more than 49 per cent restricts restructuring that these units require over a period of time to maintain their edge over others. CII has recommended abolishing of sub-section 9 with retrospective effect to facilitate restructuring.

While referring to the case of de-merger, CII stated that one had to abide by the provisions of section 391-394 of the Companies Act to avail of of the fiscal incentive in the form of unabsorbed business losses and depreciation to the de-merging entity.