Capital Gain

Tax on Capital gain on sale of Assets by Charitable Trust/NGO

Income Tax - The definition of income under section 2(24) includes Capital Gains and therefore for the purposes of section 11, Capital Gains should form part of the income and consequently it should be treated at par with any other income under section 11....

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Tax planning by conversion of stock in trade into capital asset

Income Tax - When a capital asset is converted into stock in trade then capital gain u/s 45(2) of Income Tax Act arises in the year of sale and not in the year of conversion. But in vice versa situation i.e conversion of stock in trade into capital asset there does not arise any capital gain. If an assessee is in the business of real estate and on clo...

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No Capital Gain on Conversion of sole proprietary concern or firm into Company

Income Tax - Where transfer of an asset from one person to another is not regarded as a transfer under section 47, then, for the purpose of computation of capital gains, the cost of the asset in the hands of the successor under section 49 is taken as that of the predecessor. Certain transactions like transfer of assets by a sole proprietorship or a fi...

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S. 54F Exemption if house construction not completed within 3 Years?

Income Tax - Mr. Sanghai had sold a commercial property, which was a long term asset and invested the same in purchase and construction of a flat in a apartment in Mumbai, within the one year of sale of asset and claimed deduction u/s 54F of income tax act, but later the builder has not completed the possession of the apartment within 3 years and the ...

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Eligibility of Interest on housing loan for double deduction

Income Tax - Interest on housing loan which was claimed as a deduction under section 24(b) [while computing income from house property] was also deducted by the assessee under section 48 [as cost of acquisition while computing capital gains from sale of such house property]....

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4 Major Tax Exemptions to Startups

Income Tax - 4 Major Tax Exemptions to Startups includes Income Tax Exemption on profits under Section 80-IAC of Income Tax (IT) Act, Tax Exemption on Investments above Fair Market Value, Introduction of Section 54EE in the Income Tax Act, 1961 and Amendment in Section 54GB of the Income-tax Act....

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Draft Notification on Tax on Long Term Capital Gain on Shares

Income Tax - Finance Act, 2018 has withdrawn the exemption under clause (38) of section 10 of the Income-tax Act, 1961 (the Act) and has introduced a new section 112A in the Act, to provide that long term capital gains arising from transfer of a long-term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit o...

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Amend Sec. 47(viab) related to indirect transfer of capital asset situated in India

Income Tax - The Finance Act, 2015 has amended provisions dealing with indirect transfer of capital asset situated in India. The amendment provides clarity on certain contentious aspects with regards to taxation of income arising or accruing from such indirect transfers....

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Draft rules on valuation of ‘unquoted shares’ for Sec. 56(2)(x)/50CA

Income Tax - CBDT has released the draft rules prescribing ‘unquoted shares’ valuation for purposes of Sec. 56(2)(x)/50CA (an important development impacting corporate restructuring) inviting comments from public....

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India and Singapore Sign a Third Protocol for Amending DTAA

Income Tax - Third Protocol amends DTAA with effect from 1st April, 2017 to provide for source based taxation of capital gains arising on transfer of shares in a company....

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Mere permission to construct on land not results in transfer for capital gain tax

Seshasayee Steels P. Ltd. Vs ACIT (Supreme Court) - SC held that, under the sale agreement, the Taxpayer had granted mere license to Vijay Shanthi Builders Ltd. which cannot be equated with possession of property which necessarily requires control over the property and not mere occupation and, hence, provisions of Transfer of Property Act, 1882 wer...

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Home loan interest can be included in cost in Capital Gain Computation

ITO Vs Smt. R. Aishwarya (ITAT Chennai) - Assessee is entitled to include interest in the capital cost while computing capital gains U/s 48 of the Act. Judicial discipline requires us to follow the order of a co‑ordinate bench....

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Unregistered JDA not falls under section 53A & consequently section 2(47)(v) not apply

PCIT Vs Chuni Lal Bhagat (Punjab & Haryana High Court) - Where no possession had been given by the transferor to the transferee of the entire land in part performance of JDA so as to fall within the domain of section 53A and in absence of registration of JDA, although executed afterwards, the agreement did not fall under section 53A and consequently secti...

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No transfer on acquisition of own property by assessees in the names of their childrens

Smt. R.Mangala Devi Vs ITO (ITAT Hyderabad) - Thus, it is seen that there is actually no sale of property by the assessees before us and the Sale Deed has been executed by the original owners through GPA holders to the children of assessees. Therefore, in my opinion, there is no transfer of property by the assessees in fact it is acquisition of...

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No Tax on Compensation for Compulsory Acquisition of Agricultural Land

Sumesh Kumar Vs ITO (ITAT Delhi) - On agricultural Land no tax is payable when the compensation/enhanced compensation is received by the assessee as their land were agricultural land. The compensation was received in respect of agricultural land belonging to the assessee which had been acquired by the state government....

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Draft notification for determination of FMV of inventory converted in Capital Assets

Clause (via) in section 28 is inserted by Finance Act, 2018, w.e.f. Financial year 2018-19 and it provides taxation of Inventory in the year in which it is converted in capital Assets. CBDT issued Draft of notification to be issued for amending Income-tax Rules, 1962 for prescribing the manner of d...

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24 FAQs on Taxation of Long Term Capital Gain on Shares

F.No. 370149/20/2018-TPL - (04/02/2018) - Since the introduction of the Finance Bill, 2018 on 1st February, 2018, several queries have been raised in different fora on various issues relating to the proposed new tax regime for taxation of long-term capital gains. The responses to these queries are provided below....

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TDS on interest under Capital Gains Accounts Scheme of deceased depositor

Notification No. 08/2017- Income Tax - (13/09/2017) - It has been brought to the notice of CBDT that in cases of deceased depositor who has made deposits under the Capital Gains Accounts Scheme, 1988; the banks are deducting TDS on the interest earned on such deposits in the hand of the deceased depositor and issuing TDS certificates in the name of th...

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CBDT notifies Cost Inflation indexes with Base Year as 2001-02

Notification No. 44/2017-Income Tax [S.O. 1790(E)] - (05/06/2017) - CBDT has vice Notification No. 44/2017 notified Cost Inflation indexes with Base Year as 2001-02 for the Financial Year 2001-02 to 2017-18 and same are applicable from Financial Year 2017-18....

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Gain on sale of unlisted share to be considered as Capital Gain

Letter F.No.225/12/2016/ITA.II - (02/05/2016) - For determining the tax-treatment of income arising from transfer of unlisted shares for which no formal market exists for trading, a need has been felt to have a consistent view in assessments pertaining to such income. It has, accordingly, been decided that the income arising from transfer of unli...

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Recent Posts in "Capital Gain"

Tax on Capital gain on sale of Assets by Charitable Trust/NGO

The definition of income under section 2(24) includes Capital Gains and therefore for the purposes of section 11, Capital Gains should form part of the income and consequently it should be treated at par with any other income under section 11....

Read More
Posted Under: Income Tax | ,

Tax planning by conversion of stock in trade into capital asset

When a capital asset is converted into stock in trade then capital gain u/s 45(2) of Income Tax Act arises in the year of sale and not in the year of conversion. But in vice versa situation i.e conversion of stock in trade into capital asset there does not arise any capital gain. If an assessee is in the business of real estate and on clo...

Read More
Posted Under: Income Tax | ,

No Capital Gain on Conversion of sole proprietary concern or firm into Company

Where transfer of an asset from one person to another is not regarded as a transfer under section 47, then, for the purpose of computation of capital gains, the cost of the asset in the hands of the successor under section 49 is taken as that of the predecessor. Certain transactions like transfer of assets by a sole proprietorship or a fi...

Read More
Posted Under: Income Tax |

Mere permission to construct on land not results in transfer for capital gain tax

Seshasayee Steels P. Ltd. Vs ACIT (Supreme Court)

SC held that, under the sale agreement, the Taxpayer had granted mere license to Vijay Shanthi Builders Ltd. which cannot be equated with possession of property which necessarily requires control over the property and not mere occupation and, hence, provisions of Transfer of Property Act, 1882 were not attracted....

Read More

S. 54F Exemption if house construction not completed within 3 Years?

Mr. Sanghai had sold a commercial property, which was a long term asset and invested the same in purchase and construction of a flat in a apartment in Mumbai, within the one year of sale of asset and claimed deduction u/s 54F of income tax act, but later the builder has not completed the possession of the apartment within 3 years and the ...

Read More
Posted Under: Income Tax | ,

Home loan interest can be included in cost in Capital Gain Computation

ITO Vs Smt. R. Aishwarya (ITAT Chennai)

Assessee is entitled to include interest in the capital cost while computing capital gains U/s 48 of the Act. Judicial discipline requires us to follow the order of a co‑ordinate bench....

Read More

Eligibility of Interest on housing loan for double deduction

Interest on housing loan which was claimed as a deduction under section 24(b) [while computing income from house property] was also deducted by the assessee under section 48 [as cost of acquisition while computing capital gains from sale of such house property]....

Read More
Posted Under: Income Tax | ,

Agriculture land situated beyond 8 kms is not Capital Asset & Section 50C not applies

DCIT Vs Shri Ravjibhai Manibhai Patel (ITAT Ahmedabad)

DCIT Vs Shri Ravjibhai Manibhai Patel (ITAT Ahmedabad) If an agriculture land is situated beyond 8 kms. from the local limit of any municipal or cantonment area, whose population is more than Rs.10 lakhs, then that would not fall within the ambit of definition ‘capital assets. This demarcation of the geographical situation of the land [...

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Unregistered JDA not falls under section 53A & consequently section 2(47)(v) not apply

PCIT Vs Chuni Lal Bhagat (Punjab & Haryana High Court)

Where no possession had been given by the transferor to the transferee of the entire land in part performance of JDA so as to fall within the domain of section 53A and in absence of registration of JDA, although executed afterwards, the agreement did not fall under section 53A and consequently section 2(47)(v) did not apply and no further...

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Section 55 – Cost of Acquisition and Improvement

Article explains What is meant by cost of acquisition (Section 55), Cost of Acquisition with Reference to Certain Modes of Acquisition (Section – 49), What is meant by cost of improvement, If the assessee acquires any asset by way of inheritance, partition of HUF or by any other mode specified in sec 49(1) and sec […]...

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Posted Under: Income Tax |

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