Page 202 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Unit 11: Taxation Planning

j. Where any assessee transfers any work of art, archaeological or art collection, book, Notes
manuscript, drawing , painting, photograph or print to a University, the National Museum,
the National Art Gallery, the National Archives, to the Government or any other notified
institution of national importance is not considered as transfer for the purposes of capital
gains.
k. Any transfer by way of conversion of a company’s bonds or debentures, debenture-stock
or deposit certificates in any form into shares and debentures of that company is not
regarded as transfer for the purpose of capital gains.
l. Where a non corporate person transfers its membership of a recognised stock exchange in
India to a company in exchange of shares allotted by that company is not regarded as a
transfer for the purposes of capital gains provided that such transfer was made on or
before 31st day of December, 1998.
m. Any transfer of a land of a sick industrial company which is being managed by it s
Worker’s Cooperative is not regarded as transfer for the purposes of capital gain if the
transfer is made under a scheme prepared and sanctioned under section 18 of the Sick
Industrial Companies (Special Provisions) Act, 1985. This exemption is operative only in
the period commencing from the previous year in which the said company became a sick
industrial company under section 17(1) of that act and ending with the previous year
during which the entire net worth of such company becomes equal to or exceeds the
accumulated losses. The net worth is defined in the Sick Industrial Companies Act.

n. With effect from 1-4-99 the process of sale or transfer of any capital or intangible asset of
a firm is not regarded as a transfer for the purposes of capital gains where it is on account
of the succession of the firm by a company in the business carried on by it. This exemption
is dependent on the following conditions:
i. All the assets and liabilities of the firm before the succession and relating to the
business should become the assets and liabilities of the company.
ii. All the partners of the firm before the succession should become share holders of the
company in the same proportion in which their capital accounts stood in the books
of the firm on the date of succession.
iii. The partners of the firm should not receive any consideration or benefit, directly or
indirectly, in any form or manner, other than by allotment of shares in the company.
iv. The aggregate share holding in the company by the partners should be more than
50% of the total voting power for a period of 5 years from the date of succession.
o. With effect from 1-4-99 where a sole proprietary concern is succeeded by a company in the
business carried on by it and as a result of which the sole proprietary concern sells or
transfers any capital asset or intangible asset to the company, such transfer shall not be
regarded as transfer for the purposes of capital gains. This exemption is available only if
the following conditions are fulfilled:
i. All the assets and liabilities of the business of the sole proprietary concern should
become the assets and liabilities of the company.
ii. The share holding of the sole proprietor should be more than 50% of the total voting
power in the company for a period of 5 years from the date of succession.

iii. The sole proprietor should not receive any consideration or benefit, directly or
indirectly, in any form or manner, other than by way of allotment of shares in the
company.

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