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INTRODUCTION
• CAPITAL GAINS
“Any profit or gains arising from the transfer
of capital assets is taxable under the head
capital gains in the previous year in which
the transfer has taken place.”
• Conditions for Gains to be charged under
Capital Gains
• Transfer Includes
• Sale
• Exchange
• Relinquishment
• Extinguishment
• Compulsory Acquisition
• Conversion of Capital Asset Into Stock in Trade[sec(47)(iv)]
WHAT IS NOT INCLUDED IN TRANSFER
4) Capital asset acquired by assesse after 1-4-1981 & originally acquired by previous owner
before 1-4-1981.
Cost to Previous Owner X Cost Inflation Index in the year of Transfer
Or FMV on 01.04.1981 CI Index for yr the asset is first held by assesee
(whichever is high)
5) Capital asset acquired by assesse after 1-4-1981 & originally acquired by previous owner
after 1-4-1981.
Cost to Previous Owner X Cost Inflation Index in the year of Transfer
CI Index for yr the asset is first held by assese
Indexed Cost of Improvement
• 1. Ignore Improvement Before 1.04.1981
• Indexed Cost
• =Cost of Improvement X CI Index in Yr of Transfer
• CI Index in Yr of Improvement
INTRODUCTION OF A CAPITAL
ASSET AS CAPITAL CONTRIBUTION
Section 45(3)
Taxable in the hands of the partner
Consideration: Amount recorded in the books of
accounts
DISTRIBUTION OF CAPITAL ASSETS ON A
FIRMS DISSOLUTION
Section 45(4)
Chargeable in the hands of the firm
Consideration : fair market value as
on the date of transfer
SLUMP SALE
SEC 50B
Slump sale means transfer of one or more undertakings as a
result of sale for lump sum consideration without values
being assigned to individual assets and liabilities in such
sales –Section 2(42C).
SLUMP SALE