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Unit 12: Income under the Head Capital Gains

Notes

Task Which the following transactions are transfer in relation to capital asset.

1. A house transferred by way of will to son.
2. Bonus shares given by a company to its shareholders.
3. Giving away jewellery for a piece of land.
4. Getting money in lieu of shop in a shopping complex.
5. Giving the rights to use the asset.

12.3.1 Transactions which do not Constitute Transfer [Sections 46 and 47]

The following transactions are not considered as transfer:
1. Any distribution of capital assets on the total or partial partition of a Hindu Undivided
Family.

2. Any transfer of a capital asset under a gift or will or an irrevocable trust; Provided that this
clause shall not apply to transfer under a gift or an irrevocable trust of a capital asset being
shares, debentures or warrants allotted by a company directly or indirectly to its employees
under the Employees’ Stock Option Plan or Scheme of the company offered to such
employees in accordance with the guidelines issued by the Central Government in this
behalf.
3. Any transfer of a capital asset by a company to its subsidiary company, if:

(a) the parent company or its nominees hold the whole of the share capital of the
subsidiary company, and
(b) the subsidiary company is an Indian company.

4. Any transfer of a capital asset by a subsidiary company to the holding company, if:
(a) the whole of the share capital of the subsidiary company is held by the holding
company, and

(b) the holding company is an Indian company.
5. Any transfer, in a scheme of amalgamation, of a capital asset by the amalgamating company
to the amalgamated company if the amalgamated company is an Indian company.

6. Any transfer in a scheme of amalgamation of a capital asset being share or shares held in
an Indian Company, by the amalgamating foreign company to the amalgamated foreign
company, if:
(a) at least twenty-five per cent of the shareholders of the amalgamating foreign
company continue to remain shareholders of the amalgamated foreign company;
and
(b) such transfer does not attract tax on capital gains in the country, in which the
amalgamating company is incorporated (applicable from the assessment year
1993–94).
7. Any transfer by a shareholder, in a scheme of amalgamation, of a capital asset being a
share or shares held by him in the amalgamating company, if:

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