Income Tax (India)

Section 46: Distribution of assets on liquidation of Company Where the assets of a company are distributed to its shareholders on liquidation of a company, such distribution shall not be regarded as transfer in the hands of the company. Section 47: Transactions which are not considered as Transfer The following transactions are exempt from chargeability to Capital gains, subject to the satisfaction of conditions stipulated: 1- Distribution of a capital asset on total or partial partition of a HUF. 2- Transfer of a capital asset by way of gift or under a will or an irrevocable trust. (This clause hall not apply to transfer under a gift / irrevocable trust of a capital asset being share, debentures or warrant allotted by a company to its employee under ESOP of the company as per guidelines of CG. i.e.ESOP are not covered over here.) 3- Transfer of a capital asset by holding company to its subsidiary company or vice versa is exempt if the following two conditions are fulfilled: a...

In relation to a Transfer, includes: i) Sale, exchange or relinquishment of a capital asset; or ii) Extinguishment of any rights therein; or iii) Compulsory acquisition of a capital asset under any law; or iv) Conversion or treatment of a capital asset into/as stock-in-trade; or v) The maturity or redemption of a zero coupon bond; or vi) Any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Sec. 53A of the Transfer of Property Act, 1882; or vii) Any transaction whether by way of acquiring shares in or by way of becoming a member of a co-operative society, company or other association of persons or by way of any agreement or arrangement or in any other manner which has the effect of transferring, or enabling the enjoyment of any immovable property. The expression “transfer” includes disposing of or parting with an asset or any interest therein, or creating any interest in...

 According to section 2(14), a capital asset means – (a) property of any kind held by an assessee, whether or not connected with his business or profession; (b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the SEBI regulations. (c) any unit linked insurance policy (ULIP) issued on or after 1.2.2021, to which exemption under section 10(10D) does not apply on account of –      (i) premium payable exceeding ` 2,50,000 for any of the previous years during the term of such policy; or      (ii) the aggregate amount of premium exceeding ` 2,50,000 in any of the previous years during the term of any such ULIP(s), in a case where premium is payable by a person for more than one ULIP issued on or after 1.2.2021. However, it does not include— (i) Stock-in trade: Any stock-in-trade [other than securities referred to in (b) above], consumable stores or raw materials held for the purpo...

Explanation 2 to section 28 specifically provides that where an assessee carries on speculative business, that business of the assessee must be deemed as distinct and separate from any other business. This becomes necessary because section 73 provides that losses in speculation business unlike other business, cannot be set-off against the profits of any business other than a speculation business. Profits and losses resulting from speculative transaction must be treated as separate and distinct from profits and gains of business and profession from any other business. (1) Meaning of Speculative Transaction “Speculative transaction” means a transaction in which a contract for the purchase or sales of any commodity including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips [Section 43(5)]. Where any part of the business of a company consists in the purchase and sale of the shares of other companies, suc...

The tax payable by an assessee on his income under this head is in respect of the profits and gains of any business or profession, carried on by him or on his behalf during the previous year. Business -   The term “ business ” has been defined in section 2(13) to “include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture”. Profession - The term “profession” has not been defined in the Act. It means an occupation requiring some degree of learning. • Thus, a painter, a sculptor, an author, an auditor, a lawyer, a doctor, an architect and even an astrologer are persons who can be said to be carrying on a profession but not business. • However, it is not material whether a person is carrying on a ‘business’ or ‘profession’ or ‘vocation’ since for purposes of assessment, profits from all these sources are treated and taxed alike. • Business necessarily means a continuous exercise of an activity; nevertheless, profit...

Invest for long term – an advice routinely given by many Mutual Fund distributors and investment advisors. This is especially true in case of certain Mutual Funds – such as equity and balanced funds. Let us understand why the professionals give such advice. What really happens in the long term? Is there a benefit of staying invested for long term? Consider your Mutual Fund investment as a good quality batsman. Every good quality batsman has a certain style of batting. However, each good quality batsman would be able to accumulate lots of runs, if he continues to play for years. We are talking about the record of a “good quality” batsman. Every good batsman would go through some good and poor performances. On average the record would be impressive. Similarly, a good Mutual Fund would also go through some ups and downs – often due to factors beyond the control of the fund manager. An investor would benefit if one stays invested through these funds for long periods of time. So, as long as...