transfer of business

The Direct Taxes Code (DTC) Bill 2009 – Capital Gains Tax

The definition of Capital asset continues in DTC. However the DTC classifies assets into two broad categories i.e. investment assets, and business assets. DTC envisages taxing income from transfer of investment assets as capital gains. Under the Income Tax Act 1961 (“Act”), income from transfer of capital assets even if used for business purposes was taxed as capital gain. DTC proposes to tax income from transfer of business capital assets as “business income” an..
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No “succession of business” u/s 170 even on 100% sale of shares

Even if it is accepted that by a transfer of shares u/s 2(47), there is a transfer in the right to use the capital assets of the company, still s. 170 is not attracted because there is no “transfer of business”. A company is a juristic person and owns the business. The share holders are not the owners of the company. By a transfer of the shares, there is no transfer so far as the company is concerned.
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Major changes proposed in Direct Tax Code related to Capital Gain tax

The new draft Direct Taxes Code proposes to tax capital gains as regular income at normal tax rates, thereby removing the benefits of lower rates for long-term capital gains on sale of shares.
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