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TMI BlogSection 45(4) and Section 9B - Treatment on transfer of capital asset to partner/member on dissolution or reconstitution of specified entity.X X X X Extracts X X X X X X X X Extracts X X X X ..... receives during the previous year any money or capital asset or both from a specified entity in connection with the reconstitution of such specified entity, then any profits or gains arising from such receipt by the specified person shall be chargeable to income-tax as income of such specified entity under the head Capital gains and Year of taxability such profit and gains shall be deemed to be the income of such specified entity of the previous year in which such money or capital asset or both were received by the specified person. Computation of such profit and gains from such receipt Notwithstanding anything to the contrary contained in this Act, such profits or gains shall be determined in accordance with the following formula, namely:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of short term capital asset, hence STCG if it is attributed to :- Capital asset which is STCA at the time of taxation of amount u/s 45(4); or Capital asset forming part of block of asset; or Capital asset being self-generated asset and self-generated goodwill as defined in clause (ii) of Explanation 1 to sec 45(4). The amount or a part of it shall be deemed to be from transfer of long term capital asset or assets, hence LTCG if it is attributed to capital asset which is not covered in STCG and is LTCA at the time of taxation of amount u/s 45(4). III. Section 9B : Income on receipt of capital asset or stock in trade by specified person from specified entity in connection with the dissolution or reconstruction of such specified entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or accruing as a result of such deemed transfer of the capital asset or stock in trade or both by the specified entity. Power of CBDT to issue guidelines [ Section 9B(4) and Section 9B(5) ] If any difficulty arises in giving effect to the provisions of this section and section 45(4) , the Board may, with the approval of the Central Government, issue guidelines for the purposes of removing the difficulty. Every guideline issued by the Board under section 9B(4) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the assessee. Guidelines under section 9B and section 45(4) of the Income-tax Act, 1961 ( Circular no. 14/2021 dated 02.07.2021) Attribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of any capital asset or valuation of self-generated asset or self-generated goodwill, of the specified entity, the amount charged to tax under section 45(4) shall not be attributed to any capital asset for the purposes of section 48(iii) . (4) Notwithstanding anything contained in sub-rules (2) or (3), where the aggregate of the value of money and the fair market value of the capital asset received by the specified person from the specified entity, in excess of the balance in his capital account, charged to tax under section 45(4) relate only to the capital asset received by the specified person from the specified entity, the amount charged to tax under section 45(4) shall not be attributed to any capital asset for the purposes of section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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