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2016 (5) TMI 422 - HC - Income TaxCapital gain - transfer of assets from the firm to the company - whether there is a "transfer" as contemplated under sections 2(47) and 45(4) of the Income-tax Act, 1961? - Held that:- The Finance Act, 2001, has amended clause (xiii) of section 47 of the Income-tax Act to provide that any transfer of a capital asset, from an association or persons or body of individuals to a company, under a scheme of corporatisation of a recognized stock exchange, shall not be regarded as transfer for the purpose of capital gains tax. The proviso to clause (xiii) has also been amended to provide that this one time exemption from capital gains tax is available only if all the assets and liabilities of stock exchange immediately before the succession, become the assets and liabilities of corporatised stock exchange, and the scheme of corporatisation is approved by the Securities and Exchange Board of India. This case is concerned, there is no transfer of asset as (a) no consideration was received or accrued on transfer of assets from the firm to the company ; (b) the firm has only revalued its assets which will not amount to transfer ; (c) the provision of section 45(4) of the Act is applicable only when the firm is dissolved. In the instant case, there is no distribution of asset, but only taking over of the assets from the firm to the company. Therefore, it is clear that the vesting of the property in the private limited company is not consequent or incidental to a transfer. There is no transfer of capital assets as contemplated by section 45 (1) of the Income- tax Act. - Decided in favour of assessee.
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