CA.S.THIRUNAVUKKARASU

MADURAI

� Any profit or gain arising by way of transfer

of a capital asset during the previous year

relevant for the assessment year by an

assessee is known as capital gains

� It is generally taxable under the head

Capital Gains

� Capital gain arises on the transfer of a

capital asset

� Therefore there are two pre-requisites i.e

1. There should be a capital asset

2. capital asset should be transferred during

the previous year

� Capital Assets can either be Short term or

long term

� A capital asset held by an assessee for not � A capital asset held by an assessee for not

more than 36 months immediately

preceding the date of its transfer is known

as short term capital asset

In the following cases if they are held by an

assessee for not more than 12 months immediately

preceding the date of its transfer:

1. Equity or Preferences shares held in a company. 1. Equity or Preferences shares held in a company.

stock exchange in India

2. Units of the unit Trust of India or units of a Mutual

Fund specified u/s 10(23D)

3. Zero coupon bond

� Long term Capital asset which is not a

short term capital asset

� Relevance of period of holding of capital � Relevance of period of holding of capital

asset:

For determining whether capital asset is

short term or long term

Computation of capital gain:

� It shall be computed by deducting from the full

value of the consideration received , the following

amounts:amounts:

1. expenditure incurred wholly or exclusively in

connection with such transfer.

2. the cost of acquisition of the asset and the cost

of any improvement thereto.

� Even if the full value of consideration

agreed upon is received in installments in

different years, the entire value of different years, the entire value of

consideration has to be taken into account

for computing capital gain which become

chargeable in the year of transfer.

� Judicial decision on cost of acquisition

1. Interest on money borrowed for acquiring capital

assets will form part of cost of asset.

2. Sum paid for discharge of mortgage will form 2. Sum paid for discharge of mortgage will form

cost of acquisition.

3. The cost of acquisition in relation to the financial

assets allotted to the assessee on or after 1.4.81

without any payment and on the basis of holding of

any other financial asset shall be taken to be NIL.

Issue Issue Issue Issue no.1no.1no.1no.1

� Would an asset which is sold the very next day after the period of

12/36 months is over , be treated as LT capital asset by including

both the date on which the asset is acquired and the date on

which the asset is transferred for computing period of holding ?

[Bharti Gupta [Bharti Gupta [Bharti Gupta [Bharti Gupta RamolaRamolaRamolaRamola vs. CIT (2012) 207 Taxman 178 (Delhi)]vs. CIT (2012) 207 Taxman 178 (Delhi)]vs. CIT (2012) 207 Taxman 178 (Delhi)]vs. CIT (2012) 207 Taxman 178 (Delhi)]

Issue Issue Issue Issue no.2no.2no.2no.2

� In determining the period of holding of a capital asset

received by a partner on dissolution of firm, can the period of received by a partner on dissolution of firm, can the period of

holding of the capital asset by the firm be taken into

account?

[P.P Menon vs. CIT (2010) 325 ITR 122 (Ker.)][P.P Menon vs. CIT (2010) 325 ITR 122 (Ker.)][P.P Menon vs. CIT (2010) 325 ITR 122 (Ker.)][P.P Menon vs. CIT (2010) 325 ITR 122 (Ker.)]

Issue no.3Issue no.3Issue no.3Issue no.3

� Whether indexation benefit in respect of the gifted asset

shall apply from the year in which the asset was first held by shall apply from the year in which the asset was first held by

the assessee or from the year in which the same was first

acquired by the previous owner ?

[CIT vs. Manjula J. Shah 16 Taxman 42 (Bom)][CIT vs. Manjula J. Shah 16 Taxman 42 (Bom)][CIT vs. Manjula J. Shah 16 Taxman 42 (Bom)][CIT vs. Manjula J. Shah 16 Taxman 42 (Bom)]

Issue no.4Issue no.4Issue no.4Issue no.4

� Would an assessee be entitled to the exemption under S.54 in

respect of purchase of two flats, adjacent to each other and respect of purchase of two flats, adjacent to each other and

having a common meeting point?

[CIT vs. Syed Ali Adil (2013) 352 ITR 0418 (A.P)][CIT vs. Syed Ali Adil (2013) 352 ITR 0418 (A.P)][CIT vs. Syed Ali Adil (2013) 352 ITR 0418 (A.P)][CIT vs. Syed Ali Adil (2013) 352 ITR 0418 (A.P)]

Issue no.5Issue no.5Issue no.5Issue no.5

� Can exemption under S.54 be claimed in respect of more than one

residential flat acquired by the assessee under a joint development

agreement with a builder, wherein the property owned by the

assessee was developed by the builder who constructed eight

residential flats in the said property, four of which were given to

the assessee?

[CIT vs. Smt. K. G Rukminiamma (2011) 331 ITR 211 (Kar.)][CIT vs. Smt. K. G Rukminiamma (2011) 331 ITR 211 (Kar.)][CIT vs. Smt. K. G Rukminiamma (2011) 331 ITR 211 (Kar.)][CIT vs. Smt. K. G Rukminiamma (2011) 331 ITR 211 (Kar.)]

Issue no.6Issue no.6Issue no.6Issue no.6

� Can exemption under S.54B be denied solely on the ground

that the new agricultural land purchased is not wholly that the new agricultural land purchased is not wholly

owned by the assessee, as the assessee’s son is a co-owner as

per sale deed ?

[CIT vs. Gurnam Singh (2010) 327 ITR 278 (P&H)][CIT vs. Gurnam Singh (2010) 327 ITR 278 (P&H)][CIT vs. Gurnam Singh (2010) 327 ITR 278 (P&H)][CIT vs. Gurnam Singh (2010) 327 ITR 278 (P&H)]

Issue no.7Issue no.7Issue no.7Issue no.7

� In case of a house property registered in joint names, whether

the exemption under S 54F can be allowed fully to the co-the exemption under S 54F can be allowed fully to the co-

owner who has paid whole of the purchase consideration of

the house property or will it be restricted to his share in the

house property ?

[CIT vs. Ravindra Kumar Arora (2012) 342 ITR 38 (Del)][CIT vs. Ravindra Kumar Arora (2012) 342 ITR 38 (Del)][CIT vs. Ravindra Kumar Arora (2012) 342 ITR 38 (Del)][CIT vs. Ravindra Kumar Arora (2012) 342 ITR 38 (Del)]

Issue no.8Issue no.8Issue no.8Issue no.8

� Can exemption under S.54F be denied solely on the ground

that the new residential house is purchased by the assessee that the new residential house is purchased by the assessee

exclusively in the name of his wife?

[CIT vs. Kamal Wahal (2013) 351 ITR 4 (Del)][CIT vs. Kamal Wahal (2013) 351 ITR 4 (Del)][CIT vs. Kamal Wahal (2013) 351 ITR 4 (Del)][CIT vs. Kamal Wahal (2013) 351 ITR 4 (Del)]

Issue no.9Issue no.9Issue no.9Issue no.9

� Can exemption under S.54F be denied to an assessee in respect of

investment made in construction of investment made in construction

of a residential house, on the ground that the construction was not of a residential house, on the ground that the construction was not

completed within 3 yrs after the date on which transfer took place,

on account of pendency of certain finishing work like flooring,

electrical fittings, fitting of door shutter, etc?

[CIT vs. Sambandam Udaykumar (2012) 345 ITR 389 (Kar)][CIT vs. Sambandam Udaykumar (2012) 345 ITR 389 (Kar)][CIT vs. Sambandam Udaykumar (2012) 345 ITR 389 (Kar)][CIT vs. Sambandam Udaykumar (2012) 345 ITR 389 (Kar)]

Issue no.10Issue no.10Issue no.10Issue no.10

� Can an assessee be deprived of claiming an exemption under

S.54EC, if bonds of assessee’s choice are not available or are

available only for a broken period within the period of six

months after the date of transfer of capital asset and bonds

are purchased shortly after it became available next time

after the expiry of the said six months?

[CIT vs. Cello [CIT vs. Cello [CIT vs. Cello [CIT vs. Cello PlastPlastPlastPlast (2012) 209 Taxman 617 ((2012) 209 Taxman 617 ((2012) 209 Taxman 617 ((2012) 209 Taxman 617 (BomBomBomBom.) ].) ].) ].) ]

Issue no.11Issue no.11Issue no.11Issue no.11

� Can exemption under S.54EC be denied on account of the

bonds being issued after six months of the date of transfer

even though the payment for bonds was made by the assessee even though the payment for bonds was made by the assessee

within six month period ?

[DCIT vs. Hindustan Unilever Ltd. (2010) 325 ITR 102 [DCIT vs. Hindustan Unilever Ltd. (2010) 325 ITR 102 [DCIT vs. Hindustan Unilever Ltd. (2010) 325 ITR 102 [DCIT vs. Hindustan Unilever Ltd. (2010) 325 ITR 102

(Bom)](Bom)](Bom)](Bom)]

Issue no.12Issue no.12Issue no.12Issue no.12

� Sale of security after conversion into investment, i.e assessee

converted investment into stock in trade of shareholding into

investment on 1st Apr 2004, showed the same as invst and investment on 1st Apr 2004, showed the same as invst and

sold after 2 yrs , S.10(38) was allowed. Is the same possible

as S.10(38) was introduced w.e.f 1st April 2005?

[CIT vs. Express Securities (P) Ltd (2014) 272 CTR 294 (Del)][CIT vs. Express Securities (P) Ltd (2014) 272 CTR 294 (Del)][CIT vs. Express Securities (P) Ltd (2014) 272 CTR 294 (Del)][CIT vs. Express Securities (P) Ltd (2014) 272 CTR 294 (Del)]

Issue no.13Issue no.13Issue no.13Issue no.13

� The assessee transferred its manufacturing division to

another entity under a scheme of Amalgamation pursuant to

which the acquiring company transferred investments to the which the acquiring company transferred investments to the

assessee and allotted shares to the assessee’s shareholders.

There was no monetary considersation. Can the same be

treated as a slump sale U/S 50B ?

Issue no.13Issue no.13Issue no.13Issue no.13

� S.2(42C) makes it clear that to qualify as a slump sale two

conditions have to be satisfied

i. There must be transfer of one or more undertakings as a

result of sale andandandand

ii. The sale should be for a lump sum consideration lump sum consideration lump sum consideration lump sum consideration without

values being assigned to individual assets and liabilities

Issue no.13Issue no.13Issue no.13Issue no.13

� The presence of money consideration is an essential element to

a transaction of sale

� If consideration is not money but some other valuable

consideration it may be an exchange/ barter but not not not not sale

� In the present case there is no monetary consideration and

hence the same is not a slump sale

[Zinger Investments (P) Ltd (2013) ITAT]Zinger Investments (P) Ltd (2013) ITAT]Zinger Investments (P) Ltd (2013) ITAT]Zinger Investments (P) Ltd (2013) ITAT]

THERE IS A GREAT DIFFEERENCE BETWEEN WORRY

AND CONCERN

A WORRIED PERSON SEES A PROBLEM

&

A CONCERNED PERSON SOLVES A PROBLEM

Thank you

CA.S.ThirunavukkarasuCA.S.Thirunavukkarasu

Madurai