47. Transactions not regarded as transfer .- Nothing
contained in section 45 shall apply to the following transfers
:—
(i) any distribution of capital assets 3 on the total or
partial partition of a Hindu undivided family;
(ii) Omitted
(iii) any transfer of a capital asset under a gift 5 or
will or an irrevocable trust :
Provided that this clause shall not apply to transfer under
a gift or an irrevocable trust of a capital asset being shares,
debentures or warrants allotted by a company directly or indirectly
to its employees under any Employees’ Stock Option Plan
or Scheme of the company offered to such employees in accordance
with the guidelines issued by the Central Government in this
behalf;
(iv) any transfer of a capital asset by a company to its
subsidiary company, if—
(a) the parent company or its nominees hold the whole of the
share capital of the subsidiary company, and
(b) the subsidiary company is an Indian company;
(v) any transfer of a capital asset by a subsidiary company
to the holding company, if—
(a) the whole of the share capital of the subsidiary company
is held by the holding company, and
(b) the holding company is an Indian company :
Provided that nothing contained in clause (iv) or clause
(v) shall apply to the transfer of a capital asset made after
the 29th day of February, 1988, as stock-in-trade;
(vi) any transfer, in a scheme of amalgamation , of a capital
asset by the amalgamating company to the amalgamated company
if the amalgamated company is an Indian company;
(via) any transfer, in a scheme of amalgamation , of a capital
asset being a share or shares held in an Indian company, by
the amalgamating foreign company to the amalgamated foreign
company, if—
(a) at least twenty-five per cent of the shareholders of
the amalga-mating foreign company continue to remain shareholders
of the amalgamated foreign company, and
(b) such transfer does not attract tax on capital gains
in the country, in which the amalgamating company is incorporated;
(viaa) any transfer, in a scheme of amalgamation of a banking
company with a banking institution sanctioned and brought
into force by the Central Government under sub-section (7)
of section 45 of the Banking Regulation Act, 1949 (10 of 1949),
of a capital asset by the banking company to the banking institution.
Explanation.—For the purposes of this clause,—
(i) “banking company” shall have the same meaning
assigned to it in clause (c) of section 5 of the Banking Regulation
Act, 1949 (10 of 1949);
(ii) “banking institution” shall have the same
meaning assigned to it in sub-section (15) of section 45 of
the Banking Regulation Act, 1949 (10 of 1949);
(vib) any transfer, in a demerger, of a capital asset by
the demerged company to the resulting company, if the resulting
company is an Indian company;
(vic) any transfer in a demerger, of a capital asset, being
a share or shares held in an Indian company, by the demerged
foreign company to the resulting foreign company, if—
(a) the shareholders holding not less than three-fourths
in value of the shares of the demerged foreign company continue
to remain shareholders of the resulting foreign company; and
(b) such transfer does not attract tax on capital gains
in the country, in which the demerged foreign company is incorporated
:
Provided that the provisions of sections 391 to 394 of the
Companies Act, 1956 (1 of 1956) shall not apply in case of
demergers referred to in this clause;
(vica) any transfer in a business reorganisation, of a capital
asset by the predecessor co-operative bank to the successor
co-operative bank;
(vicb) any transfer by a shareholder, in a business reorganisation,
of a capital asset being a share or shares held by him in
the predecessor co-operative bank if the transfer is made
in consideration of the allotment to him of any share or shares
in the successor co-operative bank.
Explanation.—For the purposes of clauses (vica) and
(vicb), the expressions “business reorganisation”,
“predecessor co-operative bank” and “successor
co-operative bank” shall have the meanings respectively
assigned to them in section 44DB;
(vid) any transfer or issue of shares by the resulting company,
in a scheme of demerger to the shareholders of the demerged
company if the transfer or issue is made in consideration
of demerger of the undertaking;
(vii) any transfer by a shareholder, in a scheme of amalgamation,
of a capital asset being a share or shares held by him in
the amalgamating company, if—
(a) the transfer is made in consideration of the allotment
to him of any share or shares in the amalgamated company,
and
(b) the amalgamated company is an Indian company;
(viia) any transfer of a capital asset, being bonds or Global
Depository Receipts referred to in sub-section (1) of section
115AC, made outside India by a non-resident to another non-resident;
(viii) any transfer of agricultural land in India effected
before the 1st day of March, 1970;
(ix) any transfer of a capital asset, being any work of
art, archaeological, scientific or art collection, book, manuscript,
drawing, painting, photograph or print, to the Government
or a University or the National Museum, National Art Gallery,
National Archives or any such other public museum or institution
as may be notified by the Central Government in the Official
Gazette to be of national importance or to be of renown throughout
any State or States.
Explanation.—For the purposes of this clause, “University”
means a University established or incorporated by or under
a Central, State or Provincial Act and includes an institution
declared under section 3 of the University Grants Commission
Act, 1956 (3 of 1956), to be a University for the purposes
of that Act;
(x) any transfer by way of conversion of 25 [bonds or] debentures,
debenture-stock or deposit certificates in any form, of a
company into shares or debentures of that company;
(xa) any transfer by way of conversion of bonds referred
to in clause (a) of sub-section (1) of section 115AC into
shares or debentures of any company;
(xi) any transfer made on or before the 31st day of December,
1998 by a person (not being a company) of a capital asset
being membership of a recognised stock exchange to a company
in exchange of shares allotted by that company to the transferor.
Explanation.—For the purposes of this clause, the expression
“membership of a recognised stock exchange” means
the membership of a stock exchange in India which is recognised
under the provisions of the Securities Contracts (Regulation)
Act, 1956 (42 of 1956);
(xii) any transfer of a capital asset, being land of a sick
industrial company, made under a scheme prepared and sanctioned
under section 18 of the Sick Industrial Companies (Special
Provisions) Act, 1985 (1 of 1986) where such sick industrial
company is being managed by its workers’ co-operative
:
Provided that such transfer is made during the period commencing
from the previous year in which the said company has become
a sick industrial company under sub-section (1) of section
17 of that Act and ending with the previous year during which
the entire net worth of such company becomes equal to or exceeds
the accumulated losses.
Explanation.—For the purposes of this clause, “net
worth” shall have the meaning assigned to it in clause
(ga) of sub-section (1) of section 3 of the Sick Industrial
Companies (Special Provisions) Act, 1985 (1 of 1986);
(xiii) any transfer of a capital asset or intangible asset
by a firm to a company as a result of succession of the firm
by a company in the business carried on by the firm, or any
transfer of a capital asset to a company in the course of
demutualisation or corporatisation of a recognised stock exchange
in India as a result of which an association of persons or
body of individuals is succeeded by such company :
Provided that—
(a) all the assets and liabilities of the firm or of the
association of persons or body of individuals relating to
the business immediately before the succession become the
assets and liabilities of the company;
(b) all the partners of the firm immediately before the
succession become the shareholders of the company in the same
proportion in which their capital accounts stood in the books
of the firm on the date of the succession;
(c) the partners of the firm do not receive any consideration
or benefit, directly or indirectly, in any form or manner,
other than by way of allotment of shares in the company; and
(d) the aggregate of the shareholding in the company of
the partners of the firm is not less than fifty per cent of
the total voting power in the company and their shareholding
continues to be as such for a period of five years from the
date of the succession;
(e) the demutualisation or corporatisation of a recognised
stock exchange in India is carried out in accordance with
a scheme for demutualisation or corporatisation which is approved
by the Securities and Exchange Board of India established
under section 3 of the Securities and Exchange Board of India
Act, 1992 (15 of 1992);
(xiiia) any transfer of a capital asset being a membership
right held by a member of a recognised stock exchange in India
for acquisition of shares and trading or clearing rights acquired
by such member in that recognised stock exchange in accordance
with a scheme for demutualisation or corporatisation which
is approved by the Securities and Exchange Board of India
established under section 3 of the Securities and Exchange
Board of India Act, 1992 (15 of 1992);
(xiiib) any transfer of a capital asset or intangible asset
by a private company or unlisted public company (hereafter
in this clause referred to as the company) to a limited liability
partnership or any transfer of a share or shares held in the
company by a shareholder as a result of conversion of the
company into a limited liability partnership in accordance
with the provisions of section 56 or section 57 of the Limited
Liability Partnership Act, 2008 (6 of 2009) 37a :
Provided that—
(a) all the assets and liabilities of the company immediately
before the conversion become the assets and liabilities of
the limited liability partnership;
(b) all the shareholders of the company immediately before
the conversion become the partners of the limited liability
partnership and their capital contribution and profit sharing
ratio in the limited liability partnership are in the same
proportion as their shareholding in the company on the date
of conversion;
(c) the shareholders of the company do not receive any consideration
or benefit, directly or indirectly, in any form or manner,
other than by way of share in profit and capital contribution
in the limited liability partnership;
(d) the aggregate of the profit sharing ratio of the shareholders
of the company in the limited liability partnership shall
not be less than fifty per cent at any time during the period
of five years from the date of conversion;
(e) the total sales, turnover or gross receipts in the business
of the company in any of the three previous years preceding
the previous year in which the conversion takes place does
not exceed sixty lakh rupees; and
(f) no amount is paid, either directly or indirectly, to
any partner out of balance of accumulated profit standing
in the accounts of the company on the date of conversion for
a period of three years from the date of conversion.
Explanation.—For the purposes of this clause, the
expressions “private company” and “unlisted
public company” shall have the meanings respectively
assigned to them in the Limited Liability Partnership Act,
2008 (6 of 2009);
(xiv) where a sole proprietary concern is succeeded by a
company in the business carried on by it as a result of which
the sole proprietary concern sells or otherwise transfers
any capital asset or intangible asset to the company :
Provided that—
(a) all the assets and liabilities of the sole proprietary
concern relating to the business immediately before the succession
become the assets and liabilities of the company;
(b) the shareholding of the sole proprietor in the company
is not less than fifty per cent of the total voting power
in the company and his shareholding continues to remain as
such for a period of five years from the date of the succession;
and
(c) the sole proprietor does not receive any consideration
or benefit, directly or indirectly, in any form or manner,
other than by way of allotment of shares in the company;
(xv) any transfer in a scheme for lending of any securities
under an agreement or arrangement, which the assessee has
entered into with the borrower of such securities and which
is subject to the guidelines issued by the Securities and
Exchange Board of India, established under section 3 of the
Securities and Exchange Board of India Act, 1992 (15 of 1992)
or the Reserve Bank of India constituted under sub-section
(1) of section 3 of the Reserve Bank of India Act, 1934 (2
of 1934), in this regard;
(xvi) any transfer of a capital asset in a transaction of
reverse mortgage under a scheme made and notified by the Central
Government.
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