� 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