Chargeability of Capital gains on shares allotted to partner in complaince with the Seciton 47 (xii) of the Inocme tax Act,1961., Income Tax

[Venkateswararao Sunkara]

Date on which period of holding and year of indexation should be computed in respect of Sale of shares by the partner (presently share holder) allotted for compliance of section 47(xiii) of the Income Tax Act, 1961. if sale takes place in 2010 by considering the following example. 1. Constitution of Partnership firm - 1972 2. Converted into company in the year-1998 and all the partners became the share holders of the Company. 3. Sale of shares one of the Partner (allotted u/s 47(xiii) in the year - 2010 Kindly explain the Capital gain implications in the hands of the Share Holder(Partner) as well as the company if any.

Posts / Replies

[GOPALJI AGRAWAL]

The date of allotment of shares and the value for which these shares have been alloted would be considered. The indexation would be done from 1998. As such there is no capital gain in the hands of the company.

[DEV KUMAR KOTHARI]

The date of allotment and consideration for such allotment will be considered, as righhtly pointed out by Shri Gopalji Agarwal. Take care of conditions as to lock-in-period in sub-clasue (d)of clause (xiii) of S. 47 before transferring any shares.