Beruflich Dokumente
Kultur Dokumente
CONTENTS
PAGE
Compliance checklist of actions to claim deductions with
extended time-limits for compliances under the Taxation
and Other Laws (Relaxation of Certain Provisions)
Ordinance, 2020 I-31
1
WHICH INCOME IS TAXABLE UNDER THE
HEAD “CAPITAL GAINS”
2
WHAT IS ‘CAPITAL ASSET’?
2.1 Overview of definition of in Section 2(14) 8
2.2 Scheme of the definition in clause (14) of section 2 8
2.3 Property of any kind held by the assessee 11
2.4 Securities held by a foreign institutional investor 26
2.5 Jewellery is ‘capital asset’, not ‘personal effect’ 27
2.6 Archaeological collections are ‘capital assets’ and not ‘personal
effects’ 29
2.7 Work of art/drawings are capital assets, not personal effects 30
2.8 Paintings are capital assets, not personal effects 31
2.9 Sculptures are capital assets, not personal effects 31
I-9
CONTENTS I-10
PAGE
2.10 Stock-in-trade [Sub-clause (i) of clause (14)] 31
2.11 Consumable stores or raw materials held for business/
profession are not capital assets [Sub-clause (i)] 39
2.12 Personal effects [Sub-clause (ii) of clause (14)] 39
2.13 Agricultural land in India other than land situate in urban
area [Sub-clause (iii) of clause (14)] 42
2.14 Deposit certificates issued under GMS, 2015 [Sub-clause (vi)
of clause (14)] 66
2.15 Immovable property (except stock-in-trade and rural agricul-
tural land) are capital assets 67
2.16 Silver bars/bullion/sovereigns/silver coins are capital assets
and not personal effects 68
2.17 Silver utensils are personal effects and not capital assets 68
2.18 Agricultural land situated in India in rural area is not a capital
asset 69
3
TYPES OF CAPITAL ASSETS : SHORT-TERM CAPITAL
ASSETS AND LONG-TERM CAPITAL ASSETS
4
WHAT IS ‘TRANSFER’?
PAGE
4.2 Definition of ‘transfer’ in section 2(47) of the Act 85
4.3 Indirect transfers i.e. transfer of rights effected or dependent
upon or flowing from transfer of shares of foreign company 87
4.4 Transactions deemed to be transfers under sub-sections (1A),
(2A), (3) and (4) of section 45 87
4.5 Distribution of assets by a company to its shareholders on its
liquidation is not ‘transfer’ by the company 88
4.6 Meaning of ‘transfer’ 88
4.7 Transfer by sale 89
4.8 Transfer by exchange 90
4.9 Transfer by relinquishment 93
4.10 Extinguishment of any rights in a capital asset 95
4.11 Compulsory acquisition of a capital asset under any law 98
4.12 Conversion of a capital asset into stock-in-trade 105
4.13 The maturity or redemption of a zero coupon bond 105
4.14 Part performance of a contract of sale of immovable property 106
4.15 Transfer of rights in immovable properties through the
medium of co-operative societies, companies, etc. 108
4.16 Transfer by a person to a firm or other association of persons
[AOP] or body of individuals [BOI] 108
4.17 Distribution of capital assets on dissolution 108
4.18 Distribution of money or other assets by the company on
liquidation 108
4.19 Family arrangement - Whether transfer? 109
4.20 Firm/partner transactions - Whether ‘transfer’ involved 109
4.21 Shareholder/company transactions 112
4.22 Date of transfer 114
5
WHICH TRANSFERS DO NOT GIVE RISE
TO TAXABLE CAPITAL GAINS
5.1 Transfers which do not give rise to taxable capital gains 120
5.2 Distribution by a HUF on Total/Partial Partition 124
5.3 Transfer of capital asset under a gift or a will or irrevocable
trust 125
CONTENTS I-12
PAGE
5.4 Transfers of capital assets between a parent company and its
100% subsidiary company 126
5.5 Transfer of capital asset by amalgamating company to
amalgamated company 132
5.6 Transfer of shares held in an Indian Company by amalgama-
ting foreign Co. to amalgamated foreign Co. 133
5.7 Transfer on amalgamation of banking company with a
banking institution 134
5.8 Transfer by demerged company to resulting Indian company 134
5.9 Transfer of shares by demerged foreign company to resulting
foreign company 137
5.10 Transfer in reorganization of co-operative banks 137
5.11 Transfer of shares in amalgamation or demerger of Co-opera-
tive Banks 138
5.12 Transfer by a shareholder in a scheme of amalgamation 138
5.13 Transfer outside India by non-resident of bonds/GDRs to
another non-resident 140
5.14 Transfer of Rupee Denominated Bonds outside India by one
non-resident to another non-resident 140
5.15 Exemption from tax to transfer of G-Sec. by one non-resident
to another - Section 47(viib) 140
5.16 Transfer of works of art, etc. 141
5.17 Conversion of bonds, debentures, debenture-stock or deposit
certificates into shares or debentures 142
5.18 Conversion of FCCBs into shares/debentures 142
5.19 Conversion of preference shares to equity shares [Section
47(xb)] 142
5.20 Transfer of land of sick industrial company 143
5.21 Succession of firm by company 143
5.22 Transfer of capital asset by AOP/BOI in course of demutuali-
zation/corporatization of stock exchange 148
5.23 Transfer of membership right in recognized stock exchange 148
5.24 Conversion from general partnership to LLP - Whether gives
rise to taxable capital gains? 148
5.25 Conversion of private company/unlisted public company into
LLP 149
5.26 Transfer of proprietorship to company 158
5.27 Transfer in a scheme for lending of any securities 159
I-13 CONTENTS
PAGE
5.28 Reverse mortgage transactions by senior citizens - i.e. indivi-
duals aged 60 years or more 160
5.29 Taxation of capital gains arising to sponsor on conversion of
SPV shares into units of business trust [Section 47(xvii)] 162
5.30 Tax neutrality on merger of similar schemes of Mutual Funds 163
5.31 Tax neutrality on merger or consolidation of plans within a
scheme of a mutual fund 163
6
YEAR OF TAXABILITY OF CAPITAL GAINS
PAGE
7.3 How to compute long-term capital gains other than long-term
capital gains taxable under section 112A 181
7.4 How to compute long-term capital gains in respect of listed
equity shares, equity-oriented MFs and units of business trust
u/s 112A 181
7.5 Cases in which benefit of indexation of cost of acquisition/
cost of improvement is not available for computing long-
term capital gains 182
7.6 Surcharge applicable on capital gains tax in respect of indivi-
dual, HUF, AOP, BOI and AJP for A.Y. 2020-21 183
7.7 Changes made by the Finance Act, 2020 W.E.F. AY 2021-22 196
8
HOW TO COMPUTE FULL VALUE OF
CONSIDERATION
8.1 Existence of consideration - A prerequisite for taxability as
capital gains 199
8.2 ‘Consideration’ 201
8.3 Full value of consideration 202
8.4 Deemed full value of consideration - Situations where a
deemed amount shall be full value of consideration 204
8.5 Computation of capital gains in real estate transactions -
Section 50C 207
8.6 Fair market value 216
8.7 Special provision for full value of consideration for transfer
of unquoted share - Section 50CA 216
8.8 Where the consideration is not ascertainable or cannot be
determined - Section 50D 220
8.9 Conversion by the owner of a capital asset into, or its treat-
ment as, stock-in-trade of a business carried on by him
[Section 45(2)] 222
8.10 Compulsory acquisition under any law for the time being in
force - Section 45(5) 223
8.11 Contribution of capital asset to firm/LLP/AOP/BOI by
partner/member - Section 45(3) 225
8.12 Distribution of capital assets on dissolution of firm/LLP/
AOP/BOI - Section 45(4) 227
8.13 Insurance claim received in respect of capital asset destroyed
by act of god etc. - Section 45(1A) 230
I-15 CONTENTS
PAGE
8.14 Transfer by way of distribution of assets by company in liqui-
dation to its shareholders - Section 46(2) 232
8.15 Full value of consideration where assessee-buyer gets excess
amount of compensation received by seller over agreed sale
consideration where land agreed to be bought is acquired. 232
9
WHAT IS EXPENDITURE ON TRANSFER OF
CAPITAL ASSETS?
PAGE
10
WHAT IS COST OF ACQUISITION?
PAGE
10.23 Cost of acquisition of intangible assets purchased 275
10.24 Capital asset acquired by a shareholder on distribution of its
assets in liquidation - Section 55(2)(b)(iii) 275
10.25 Where conditions for exemption of transfers between parent
and its 100% subsidiary are violated subsequently 277
10.26 Cost of acquisition of shares acquired on stock-splits etc. 277
10.27 Cost of acquisition of rights shares 278
10.28 Cost of acquisition of capital asset acquired very long ago 279
10.29 Cost of acquisition of immovable property taxed as gift 283
10.30 Cost of acquisition of jewellery, bullion, shares and securities,
paintings, sculptures etc. taxed as gifts under section
56(2)(vii)/(viia)/(x) 285
10.31 Cost of acquisition in case of depreciable assets on which
depreciation allowed at SLM rates - Section 50A 288
10.32 Cost of acquisition in case of slump sale - Section 50B 288
10.33 Where enhanced compensation is received 289
10.34 Cost of acquisition of certain assets - Calves, colts, trees etc. 289
10.35 Shares acquired by non-resident assessee on redemption
of GDRs 290
10.36 Tax neutrality on merger of similar schemes of Mutual Funds 290
11
WHAT IS COST OF IMPROVEMENT?
PAGE
11.10 Taxability of advance for transfer of a capital asset where
advance is forfeited (Sections 51 and 56) 300
12
WHAT IS INDEXED COST OF ACQUISITION AND
INDEXED COST OF IMPROVEMENT?
13
ROLLOVER DEDUCTION IN RESPECT OF PROFIT
ON SALE OF PROPERTY USED FOR RESIDENCE
[SECTION 54]
PAGE
14
DEDUCTION OF ROLLOVER OF GAIN ON TRANSFER
OF LAND USED FOR AGRICULTURAL
PURPOSES [SECTION 54B]
15
ROLLOVER DEDUCTION IN RESPECT OF CAPITAL
GAIN ON COMPULSORY ACQUISITION OF LANDS
AND BUILDINGS [SECTION 54D]
PAGE
15.6 Industrial undertaking - Meaning of 378
15.7 Enhanced compensation 380
15.8 Exemption in case of depreciable assets 381
15.9 Capital Gains Accounts Scheme 382
15.10 Extension of time for acquiring new asset or depositing or
investing capital gain 385
15.11 Assessee availing section 54D relief required to file ITR w.e.f.
AY 2020-21 even if his total income after relief is below
threshold exemption limit 386
15.12 Non-disclosure of capital gains in ITR will not bar assessee
from claiming deduction u/s 54D in assessment proceedings 387
15.13 Claim under wrong provision will not bar deduction under
section 54D 388
16
ROLLOVER DEDUCTION IN RESPECT OF INVEST-
MENT OF LONG-TERM CAPITAL GAINS FROM
LAND OR BUILDING OR BOTH IN SPECIFIED
BONDS [SECTION 54EC]
PAGE
16.12 Non-disclosure of capital gains in ITR will not bar assessee
from claiming deduction u/s 54EC in assessment proceedings 402
16.13 Claim under wrong provision will not bar deduction under
section 54EC 402
17
CAPITAL GAINS NOT TO BE CHARGED ON INVEST-
MENT IN UNITS OF A SPECIFIED FUND
18
DEDUCTION IN RESPECT OF LONG TERM CAPITAL
GAIN INVESTED IN RESIDENTIAL
HOUSE [SECTION 54F]
PAGE
18.15 Assessee availing section 54F relief required to file ITR w.e.f.
AY 2020-21 even if his total income after relief is below
threshold exemption limit 420
18.16 Non-disclosure of capital gains in ITR will not bar assessee
from claiming deduction u/s 54F in assessment proceedings 421
18.17 Claim under wrong provision will not bar deduction under
section 54F 421
19
TAX INCENTIVES FOR TRANSFER OF ASSETS ON
SHIFTING OF INDUSTRIAL UNDERTAKINGS
FROM URBAN AREA/SHIFTING OF
INDUSTRIAL UNDERTAKING FROM
URBAN AREA TO ANY SPECIAL
ECONOMIC ZONE (SEZ)
[SECTION 54G/54GA]
PAGE
20
TAX EXEMPTION FOR CAPITAL GAINS FROM SALE OF
RESIDENTIAL PROPERTY IF INVESTED IN CAPITAL
OF START-UP COMPANY - SECTION 54GB
20.1 Tax Exemption for long-term capital gains from selling resi-
dential property if the same is invested in equity shares
of start-up company 441
20.2 Conditions to be satisfied for availing tax relief in respect
of capital gains by investment in shares of a company
which is “eligible start-up” 442
20.3 Promoter selling his residential property and investing
monies in its shares- is it efficient from point of view
of explaining “source of source” under section 68 444
20.4 Assessee availing section 54GB relief required to file ITR
w.e.f. AY 2020-21 even if his total income after relief is
below threshold exemption limit 444
20.5 Non-disclosure of capital gains in ITR will not bar assessee
from claiming deduction u/s 54GB in assessment
proceedings 445
20.6 Claim under wrong provision will not bar deduction under
section 54GB 446
20.7 FAQs on section 54GB 446
21
POWER OF CBDT TO RELAX ANY REQUIREMENT
FOR CLAIMING DEDUCTIONS
22
TAX COMPUTATION IN RESPECT OF STCG
PAGE
23
TAX COMPUTATION IN CASE OF LONG-TERM
CAPITAL GAINS
24
LONG-TERM CAPITAL GAINS TAX ON LISTED
EQUITY SHARES, UNITS OF EQUITY-ORIENTED
MUTUAL FUNDS AND UNITS OF BUSINESS TRUSTS
PAGE
24.14 Condition (d) : Section 112A applies only if LTCG arises
from “Specified Asset” 481
24.15 Condition (e) : Section 112A is applicable if STT is paid 482
24.16 FAQs on Cost of acquisition of specified assets 488
24.17 Computation of tax if section 112A applies 509
24.18 Deductions under Chapter VI-A are not available qua
capital gains under section 112A 515
24.19 Rebate under section 87A 515
24.20 Taxation of non-residents 516
24.21 Miscellaneous 521
24.22 Taxation of long term capital gains in the case of foreign
institutional investor 523
25
REFERENCE TO VALUATION OFFICER
PAGE
26
LOSS UNDER THE HEAD ‘CAPITAL GAINS’
27
DISTRIBUTION OF ASSETS BY COMPANIES
IN LIQUIDATION
28
HOW TO COMPUTE CAPITAL GAINS IN CASE OF BUY-
BACK OF SHARES/SPECIFIED SECURITIES
PAGE
28.4 Amount received by the company in respect of issue of
share which is the subject of buyback 563
29
CAPITAL GAIN AND DEPRECIABLE ASSETS
30
SLUMP SALE
31
CAPITAL GAIN ON INTANGIBLE ASSETS
PAGE
31.10 Devaluation gain 593
31.11 Patent 593
31.12 Right to manufacture, produce or process any article or
thing 593
31.13 Right to carry on any business or profession 594
32
CHARITABLE TRUST AND CAPITAL GAINS
33
CAPITAL GAIN IN REAL ESTATE TRANSACTIONS
PAGE
33.9 Agricultural land 608
33.10 Deemed transfers 609
33.11 Deemed sale consideration - Section 50C 610
33.12 Section 50C vis-a-vis transfers under section 45(2), 45(3)
and 45(4) 610
33.13 Exemptions under sections 54, 54EC and 54F 611
33.14 Development agreements (Joint Development Agreements) 613
33.15 Lease right 614
33.16 99 years lease 615
33.17 Sub-lease for 97 years 615
33.18 Composite consideration 616
33.19 Single transaction - Whether business 617
33.20 Repurchase of sold property 618
33.21 Mortgage followed by sale 619
33.22 Where auction sale is set aside 620
APPENDICES
APPENDIX 1 : Taxation and Other Laws (Relaxation of Certain
Provisions) Ordinance, 2020 625
APPENDIX 2 : Section 3 of the Taxation and Other Laws (Relaxation
of Certain Provisions) Ordinance, 2020 - Relaxation
of certain provisions of specified Acts - Notified dates
for extension of due dates of various completions or
compliances under specified Acts 630