CONTENTS 1 WHAT IS CAPITAL GAINS 1.1 Concept of capital gains 1 1.2 Legislative background for taxation of capital gains in India 1 2 WHICH INCOME IS TAXABLE UNDER THE HEAD CAPITAL GAINS 2.1 Charging sections - Sections 45, 46 and 46A 3 2.2 Conditions to be fulfilled for taxing capital gains 6 2.3 Tax-free capital gains 7 2.4 Whether situs/location of a capital asset matters for taxability of capital gains? 8 3 WHAT IS CAPITAL ASSET? 3.1 Definition of capital asset in section 2(14) of the Act 19 3.2 Property 21 3.3 Property held as stock-in-trade is not capital asset 32 3.4 Consumable stores or raw materials held for business/ profession not a capital asset 40 3.5 Personal effects are not capital assets 40 I-11
CONTENTS I-12 3.6 Jewellery is capital asset 43 3.7 Paintings are capital assets 44 3.8 Work of art/drawings are capital assets 44 3.9 Sculptures are capital assets 45 3.10 Archaeological collections are capital assets 46 3.11 Immovable property (except stock-in-trade and rural agricultural land) are capital assets 46 3.12 Silver bars/bullion/sovereigns/silver coins are capital assets and not personal effects 47 3.13 Silver utensils are personal effects and not capital assets 48 3.14 Agricultural land situated in India in rural area is not a capital asset 48 4 TYPES OF CAPITAL ASSETS : SHORT-TERM CAPITAL ASSETS AND LONG-TERM CAPITAL ASSETS 4.1 Classification of capital asset into short-term capital asset and long-term capital asset 68 4.2 How to compute the holding period of a capital asset? 71 5 WHAT IS TRANSFER? 5.1 Definition of transfer in section 2(47) of the Act 79 5.2 Meaning of transfer 80 5.3 Transfer by sale 81 5.4 Transfer by exchange 82 5.5 Transfer by relinquishment 85 5.6 Extinguishment of any rights in a capital asset 86 5.7 Compulsory acquisition of a capital asset under any law 89 5.8 Conversion of a capital asset into stock-in-trade 89 5.9 Part performance of a contract of sale of immovable property 90 5.10 Transfer of rights in immovable properties through the medium of co-operative societies, companies, etc. 91
I-13 CONTENTS 5.11 Transfer by a person to a firm or other association of persons [AOP] or Body of Individuals [BOI] 91 5.12 Distribution of capital assets on dissolution 91 5.13 Distribution of money or other assets by the company on liquidation 92 5.14 The maturity or redemption of a zero coupon bond 92 5.15 Family arrangement - Whether transfer? 92 6 WHICH TRANSFERS DO NOT GIVE RISE TO TAXABLE CAPITAL GAINS 6.1 Transfers which do not give rise to taxable capital gains 93 6.2 Distribution by a HUF on Total/Partial Partition 98 6.3 Transfer of capital asset under a gift or a will or irrevocable trust 98 6.4 Transfers of capital assets between a parent company and its 100% subsidiary company 99 6.5 Transfer of capital asset by amalgamating company to amalgamated company 105 6.6/7 Transfer on amalgamation of banking company with a banking institution 106 6.8 Transfer by demerged company to resulting Indian company 107 6.9 Transfer of shares by demerged foreign company to resulting foreign company 110 6.10 Transfer in reorganization of co-operative banks 110 6.11 Transfer of shares in amalgamation or demerger of Co-operative Banks 110 6.12 Transfer by a shareholder in a scheme of amalgamation 111 6.13 Transfer by non-resident of bonds/gdrs 112 6.14 Transfer of works of art, etc. 113 6.15 Conversion of bonds, debentures, debenture-stock or deposit certificates into shares or debentures 113 6.16 Conversion of FCCBs into shares/debentures 114 6.17 Transfer of land of sick industrial company 114 6.18 Succession of firm by company 115
CONTENTS I-14 6.19 Transfer of capital asset by AOP/BOI in course of demutualization/corporatization of stock exchange 119 6.20 Conversion from general partnership to LLP - Whether gives rise to taxable capital gains? 119 6.21 Transfer of proprietorship to company 120 6.22 Transfer of membership right in recognized stock exchange 122 6.23 Conversion of private company/unlisted public company into LLP 122 6.24 Transfer in a scheme for lending of any securities 130 6.25 Reverse mortgage transactions by senior citizens - i.e. individuals aged 60 years or more 131 6.26 Exemption from tax to transfer of govt. security by one non-resident to another - Section 47(viib) 134 6.27 Taxation of capital gains arising to sponsor on conversion of SPV shares into units of business trust [Section 47(xvii)] 135 6.28 Tax neutrality on merger of similar schemes of Mutual Funds 135 6.29 Tax neutral conversion of preference shares to equity shares [Section 47(xb)] 135 6.30 Extension of capital gain exemption to Rupee Denominated Bonds 136 7 YEAR OF TAXABILITY OF CAPITAL GAINS 7.1 Introduction 137 7.2 Insurance claim 138 7.3 Conversion of asset into stock-in-trade 140 7.4 Transfer by depository or participant of beneficial interest in securities 141 7.5 Transfer of assets by way of capital contribution 142 7.6 Distribution of assets on dissolution of Firm/AOP/BOI or otherwise 143 7.7 Compulsory acquisition 145 7.8 Enhanced compensation on compulsory acquisition 146 7.9 Year of taxability of capital gains when owner of land transfers land to developer under Joint Development Agreement 148
I-15 CONTENTS 7.9A Entitlement to goodwill 150 7.10 Transfer by partner of right in firm s asset for consideration payable in instalments 150 7.11 Accrual of right to receive profits determinative 150 7.12 Sale of part of asset 151 8 COMPUTATION OF CAPITAL GAINS - SHORT-TERM CAPITAL GAINS AND LONG-TERM CAPITAL GAINS 8.1 Tax incidence depends upon whether capital gains is longterm capital gains or short-term capital gains 152 8.2 How to compute short-term capital gains 153 8.3 How to compute long-term capital gains other than longterm capital gains taxable under section 112A 154 8.4 How to compute long-term capital gains in respect of listed equity shares, equity-oriented MFs and units of business trust u/s 112A 154 8.5 Cases in which benefit of indexation of cost of acquisition/ cost of improvement is not available for computing long-term capital gains 155 9 HOW TO COMPUTE FULL VALUE OF CONSIDERATION 9.1 Existence of consideration - A prerequisite for taxability as capital gains 156 9.2 Consideration 158 9.3 Full value of consideration 160 9.4 Fair market value 164 9.5 Computation of capital gains in real estate transactions - Section 50C 164 9.6 Conversion by the owner of a capital asset into, or its treatment as, stock-in-trade of a business carried on by him [Section 45(2)] 172 9.7 Contribution of capital asset to firm/llp/aop/boi by partner/member - Section 45(3) 174
CONTENTS I-16 9.8 Distribution of capital assets on dissolution of firm/llp/ AOP/BOI - Section 45(4) 176 9.9 Compulsory acquisition under any law for the time being in force - Section 45(5) 180 9.10 Insurance claim received in respect of capital asset destroyed by act of god etc. - Section 45(1A) 181 9.11 Transfer by way of distribution of assets by company in liquidation to its shareholders - Section 46(2) 182 9.12 Special provision for full value of consideration for transfer of unquoted share - Section 50CA 182 9.13 Where the consideration is not ascertainable or cannot be determined - Section 50D 183 10 WHAT IS EXPENDITURE ON TRANSFER OF CAPITAL ASSETS? 10.1 Cost of Transfer 186 10.2 Expenditure excluded from definition of cost of transfer 187 10.3 Legal expenses incurred for obtaining Compensation for compulsory acquisition 188 10.4 Expenditure incurred for obtaining probate of the will 189 10.5 Transfer charges paid to co-operative society 189 10.6 Expenditure incurred before or after passing of title 189 10.7 Liability/obligation 190 10.8 Interest on provident fund loan 190 10.9 Damages for mental agony and suffering 191 10.10 Expenses on staff after the takeover of undertaking 191 10.11 Amount paid for getting land acquired by Government 191 10.12 Where option under section 55(2)(b)(i) is exercised 192 10.13 Payment for freeing property of encumbrance 193 10.14 Payment for release of interest 195 10.15 Brokerage 195 10.16 Assumed value of solatium 196 10.17 Amount embezzled 196 10.18 Interest on delayed payment of unearned increase 196
I-17 CONTENTS 11 WHAT IS COST OF ACQUISITION? 11.1 Meaning/definition of cost of acquisition 197 11.2 Ground rent - Whether deductible as COA 205 11.3 Interest on moneys borrowed to purchase asset - Whether deductible as COA 205 11.4 Interest paid to partners - Whether COA 206 11.5 Payment to estate of deceased partner - Whether COA 206 11.6 Litigation expenses to register transfer of shares is COA of shares 206 11.7 Payment having no connection with the capital asset 206 11.8 Agricultural land becoming capital asset by notification - How COA to be computed 207 11.9 Income-tax dues - Whether COA 207 11.10 Sums paid under will - Whether COA 208 11.11 Urban land tax and other taxes - Whether COA 208 11.12 Cost of acquisition of shares obtained in family settlement 208 11.13 Subsequent events do not affect cost of acquisition 208 11.14 Date of acquisition 209 11.15 COA where asset becomes capital asset after acquisition but before sale 209 11.16 Cases in which the Act deems cost of acquisition of capital asset to be nil 210 11.17 Cases in which cost of acquisition deemed to be cost to the previous owner 211 11.18 Cost of acquisition of shares of amalgamated company in exchange for shares of amalgamating company - Section 49(2) 223 11.19 Cost of shares/debentures acquired on conversion of bonds/ debentures/deposit certificates/fccbs into shares/debentures - Section 49(2A) 223 11.20 Cost of acquisition of ESOPs/sweat equity shares - Section 49(2AA)/section 49(2AB) 224 11.20A Cost of acquisition in case of unit of business trust acquired by sponsor in exchange for shares in SPV 224
CONTENTS I-18 11.21 Cost of acquisition of shares in the resulting company in a demerger and cost of original shares in demerged company 224 11.22 Cost of acquisition of intangible assets purchased 226 11.23 Capital asset acquired by a shareholder on distribution of its assets in liquidation - Section 55(2)(b)(iii) 226 11.24 Cost of acquisition of bonus shares 227 11.25 Where conditions for exemption of transfers between parent and its 100% subsidiary are violated subsequently 228 11.26 Cost of acquisition of shares acquired on stock-splits etc. 228 11.27 Cost of acquisition of rights shares 228 11.28 Cost of acquisition of capital asset acquired long ago very 230 11.29 Cost of acquisition of immovable property taxed as gift 235 11.30 Cost of acquisition of jewellery, bullion, shares and securities, paintings, sculptures etc. taxed as gifts under section 56(2)(vii)/(viia)/(x) 237 11.31 Cost of acquisition in case of depreciable assets on which depreciation allowed at SLM rates - Section 50A 240 11.32 Cost of acquisition in case of slump sale - Section 50B 240 11.33 Where enhanced compensation is received 241 11.34 Cost of acquisition of certain assets - Calves, colts, trees etc. 241 11.35 Shares acquired by non-resident assessee on redemption of GDRs 242 11.36 Tax neutrality on merger of similar schemes of Mutual Funds 242 12 WHAT IS COST OF IMPROVEMENT? 12.1 Cost of improvement - Definition 244 12.2 Allowance of deduction 245 12.3 Expenses incurred by persons other than assessee 247 12.4 Improvement of title 248 12.5 Asset acquired before 1-4-1981 and transferred in any previous year relevant to AYs 1992-93 to 2017-18 249 12.6 Assets acquired before 1-4-1981 and transferred in any previous year relevant to AY 2018-19 or subsequent AY 251
I-19 CONTENTS 12.7 Assets acquired after 1-4-1981 but on or before 31-3-2001 and transferred in any previous year relevant to AY 2018-19 or subsequent AY 251 12.8 Assets acquired after 1-4-2001 252 12.9 Taxability of advance for transfer of a capital asset where advance is forfeited (Sections 51 and 56) 253 13 WHAT IS INDEXED COST OF ACQUISITION AND INDEXED COST OF IMPROVEMENT? 13.1 Indexation benefit for computing long-term gains - Relief from inflation 254 13.2 Cases in which indexation benefit is not available for computing long-term capital gains : 254 13.3 Indexed cost of acquisition/improvement - Meaning of 255 13.4 Indexation benefit linked to period of holding of asset and not to its owner 257 13.5 Computation of indexed cost of acquisition/improvement 260 14 ROLLOVER DEDUCTION IN RESPECT OF PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE [SECTION 54] 14.0 Provisions of section 54 in a nutshell 263 14.1 Profit on sale of property used for residence [Section 54] 264 14.2 Sale of new residential house within 3 years 273 14.3 Buildings or land appurtenant thereto 276 14.4 Sale of independent residential unit forming part of a larger house - Whether eligible for deduction under section 54 279 14.5 Purchase - Meaning of 279 14.6 Where house is partly purchased and partly constructed 282 14.7 Construction of new house 282 14.8 Nexus to sale proceeds 284 14.9 Where assessee does not own land on which new house is constructed 285
CONTENTS I-20 14.10 Sale of land gifted to spouse 286 14.11 Purchase of new property in name of spouse 286 14.12 Where property purchased is partly non-residential 286 14.13 Acquisition of fraction of ownership - Whether eligible for deduction under section 54 287 14.14 Capital Gains Accounts Scheme 287 14.15 Extension of time for acquiring new asset or depositing or investing capital gain [Section 54H] 290 15 DEDUCTION OF ROLLOVER OF GAIN ON TRANSFER OF LAND USED FOR AGRICULTURAL PURPOSES [SECTION 54B] 15.0 Provisions of section 54B in brief 292 15.1 Gain on transfer of land used for agricultural purposes 292 15.2 Quantum of deduction under section 54B 293 15.3 Sale of new land within 3 years 295 15.4 Who can claim the exemption under section 54B 296 15.5 User of land for agricultural purposes in two years immediately preceding transfer 297 15.6 Whether new land purchased should be in assessee s name only to qualify for section 54B deduction? 298 15.7 Purchase of new land before sale of old land 299 15.8 Capital Gains Accounts Scheme 299 15.9 Extension of time for acquiring new asset or depositing or investing capital gain 302 16 ROLLOVER DEDUCTION IN RESPECT OF CAPITAL GAIN ON COMPULSORY ACQUISITION OF LANDS AND BUILDINGS [SECTION 54D] 16.0 Provisions of section 54D in a nutshell 303 16.1 Capital gain on compulsory acquisition of lands and buildings 304 16.2 Quantum of deduction 305
I-21 CONTENTS 16.3 Tax implications on sale of new asset within 3 years 306 16.4 Who can claim the exemption under section 54D 307 16.5 Industrial undertaking - Meaning of 307 16.6 Enhanced compensation 309 16.7 Exemption in case of depreciable assets 309 16.8 Capital Gains Accounts Scheme 311 16.9 Extension of time for acquiring new asset or depositing or investing capital gain 314 17 ROLLOVER DEDUCTION IN RESPECT OF INVESTMENT OF CAPITAL GAINS IN SPECIFIED BONDS [SECTION 54EC] 17.0 Provisions of section 54EC in a nutshell 315 17.1 Pre-conditions for deduction under section 54EC 316 17.2 Ceiling on investment - ` 50 lakhs in a financial year 318 17.3 Transfer of specified asset within 3 years 320 17.4 Whether capital gains arising under section 50 is long-term capital gains for section 54EC purposes? 321 17.5 Time-limit of 6 months for investment in specified bonds under section 54EC 325 17.6 Name in which bonds should be purchased 329 17.7 Specified bonds for investment under section 54EC 330 17.8 Direct nexus not required 330 17.9 Extension of time for acquiring new asset or depositing or investing capital gain 331 17A CAPITAL GAINS NOT TO BE CHARGED ON INVESTMENT IN UNITS OF A SPECIFIED FUND 17A.1 Backdrop 333 17A.2 Capital gains exemption on investment in specified funds - Section 54EE 334
CONTENTS I-22 18 DEDUCTION IN RESPECT OF LONG TERM CAPITAL GAIN INVESTED IN RESIDENTIAL HOUSE [SECTION 54F] 18.0 Provisions of section 54F in brief 336 18.1 Long term capital gain invested in residential house 337 18.2 Conditions for deduction 337 18.3 Quantum of deduction 338 18.4 Net consideration 342 18.5 Purchase/construction of second residential house 342 18.6 Date of purchase of new house 343 18.7 Sale of second vacant land and investment in second dwelling unit 343 18.8 Exemption for minor 344 18.9 No deduction for extension of house 344 18.10 Transfer of new residential house 344 18.11 Whether deduction is available if new house purchased in joint names of assessee and his wife? 344 18.12 Capital Gains Accounts Scheme 345 18.13 Extension of time for acquiring new asset or depositing or investing capital gain 348 19 TAX INCENTIVES FOR TRANSFER OF ASSETS ON SHIFTING OF INDUSTRIAL UNDERTAKINGS FROM URBAN AREA/SHIFTING OF INDUSTRIAL UNDERTAKING FROM URBAN AREA TO ANY SPECIAL ECONOMIC ZONE (SEZ) [SECTION 54G/54GA] 19.0 Provisions of section 54G/54GA in brief 350 19.1 Transfer of assets on shifting of industrial undertakings [Section 54G] 351 19.2 Conditions for deduction under section 54G 351 19.3 Quantum of deduction under section 54G 352
I-23 CONTENTS 19.4 Sale of new asset within three years-tax implications 354 19.5 Shifting of industrial undertaking from urban area to any special economic zone (SEZ) [Section 54GA] 355 19.6 Capital Gains Accounts Scheme 357 20 TAX INCENTIVES FOR INVESTMENT IN CAPITAL OF A SMALL OR MEDIUM ENTERPRISE UNDER NEW SECTION 54GB 20.1 Introduction 361 20.2 Conditions to be satisfied for availing the rollover relief under new section 54GB 361 21 TAX COMPUTATION IN RESPECT OF STCG 21.1 Tax on short-term capital gains 365 21.2 Tax on short term capital gain in case of units of business trusts [Section 111A] 366 22 TAX COMPUTATION IN CASE OF LONG-TERM CAPITAL GAINS 22.1 Overall scheme of tax computation on LTCG 367 22.2 Tax on long-term capital gains from shares, securities and units 368 22.3 Tax on long-term capital gains other than from shares, securities and units 369 22.4 Concessional tax rate of 10% not applicable to long-term capital gains from units of GETFs/Debt-oriented mutual funds - Section 112(1) 369
CONTENTS I-24 23 LONG-TERM CAPITAL GAINS TAX ON LISTED EQUITY SHARES, UNITS OF EQUITY-ORIENTED MUTUAL FUNDS AND UNITS OF BUSINESS TRUSTS 23.1 Taxation of long-term capital gains from listed equity shares and units of equity-oriented MFs upto AY 2018-19 372 23.2 New Scheme of taxation of long-term capital gains from listed equity shares, units of equity-oriented MFs and units of business trusts - Section 112A 372 23.3 Rationale behind the introduction of new scheme of taxation by the Finance Act, 2018 375 23.4 Conditions for applicability of new section 112A 375 23.5 Computation of tax 377 23.6 Computation of LTCG 378 23.7 Cost of Acquisition (COA) 378 23.8 New Section overrides section 112 380 23.9 Applicability of New Section to different assessees 381 23.10 Applicability of section 112 in certain cases 383 23.11 Computation of long-term capital gains under the New Section 385 23.12 Condition (b) : The total income of the assessee should include income chargeable as capital gains 390 23.13 Condition (c) : The asset has to be long term capital asset 396 23.14 Condition (d) : Section 112A applies only if LTCG arises from Specified Asset 397 23.15 Condition (e) : Section 112A is applicable if STT is paid 398 23.16 Cost of acquisition 404 23.17 Computation of tax if section 112A applies 425 23.18 Deductions under Chapter VI-A are not available qua capital gains under section 112A 431 23.19 Rebate under section 87A 431 23.20 Taxation of non-residents 432 23.21 Miscellaneous 437 23.22 Taxation of long term capital gains in the case of foreign institutional investor 439
I-25 CONTENTS 24 REFERENCE TO VALUATION OFFICER 24.1 Statutory provisions 440 24.2 Valuation Officer 441 24.3 Valuation procedure 443 24.4 Purpose for which reference may be made 443 24.5 Binding nature of Valuation Officer s report 447 24.6 Where assessment is completed before receipt of valuation report 448 24.7 Where valuation report is not received 448 24.8 Reference after assessment 448 24.9 Reference cannot be made without giving opportunity and disclosing reasons 449 24.10 Second reference 450 24.11 Appeal 450 24.12 Appearance by registered valuer 451 24.13 Rectification of mistakes 451 24.14 Power to take evidence on oath, etc. 452 25 LOSS UNDER THE HEAD CAPITAL GAINS 25.1 Loss under the head Capital gains - Whether same as capital loss 453 25.2 Carry forward and set-off of losses under the head Capital gains 454 25.3 On Liquidation of Company 458 25.4 Revaluation of Investment 459 25.5 Where transaction of sale is genuine 460 25.6 Sum assessed as dividend under section 2(22) 460 25.7 Carry forward and set off 461
CONTENTS I-26 26 DISTRIBUTION OF ASSETS BY COMPANIES IN LIQUIDATION 26.0 Introduction 463 26.1 Coverage of section 46(2) 463 26.2 Nature of asset in the hands of shareholders 464 26.3 Liquidation of subsidiary company and application of section 46 464 26.4 Realisation of asset by liquidator 465 26.5 Distinction between a company in liquidation and a company on liquidation 466 26.6 Section 46(2) - A deeming provision 467 26.7 Section 46(2) is a charging provision 469 26.8 Liability to capital gains 470 27 HOW TO COMPUTE CAPITAL GAINS IN CASE OF BUY-BACK OF SHARES/ SPECIFIED SECURITIES 27.1 What is buy-back? 474 27.2 Tax implications of buy-back for shareholder - Section 46A 474 27.3 Analysis of section 46A 475 27.4 Where buy-back held to be disguised dividends 476 27.5 Withholding tax of 20% of profits distributed by unlisted companies introduced by the Finance Act, 2013 w.e.f. 1-6-2013 477 28 CAPITAL GAIN AND DEPRECIABLE ASSETS 28.1 Introduction 488 28.2 Statutory provisions of section 50 488 28.3 Power generation undertakings [Section 50A] 493 28.4 Legal decisions - In assessee s favour 495 28.5 Legal decisions - In Revenue s favour 497
I-27 CONTENTS 29 SLUMP SALE 29.1 Introduction 499 29.2 Slump sale - Definition 499 29.3 Computation of capital gain from slump sale [Section 50B] 500 29.4 Negative Net Worth 503 29.5 Complete sale of unit or undertaking is a must 503 29.6 Lock, stock and barrel sale 504 29.7 Comparative study of slump sale and demerger 506 29.8 Audit certificate in Form No. 3CEA 507 29.9 Analysis of requirements of Form 3CEA 509 30 CAPITAL GAIN ON INTANGIBLE ASSETS 30.1 Goodwill 512 30.2 Route permits/stage carriage permits 514 30.3 Import licences/entitlements 514 30.4 Rights under a contract 514 30.5 Tenancy rights 515 30.6 Loom hours 516 30.7 Leasehold rights 516 30.8 Life interests 518 30.9 Remainderman s reversionary interest 518 30.10 Devaluation gain 519 30.11 Patent 519 30.12 Right to manufacture, produce or process any article or thing 519 30.13 Right to carry on any business or profession 520 31 CHARITABLE TRUST AND CAPITAL GAINS 31.1 Introduction 521
CONTENTS I-28 31.2 Trust wholly for charitable or religious purposes [Section 11(1A)(a)] 521 31.3 Trust in part for charitable or religious purposes [Section 11(1A)(b)] 522 31.4 Capital gains kept in fixed deposit in bank 523 31.5 Capital gain kept as deposit in public sector companies 524 31.6 Capital gain used for redeeming pledged asset 524 31.7 Capital gain used for acquiring English Mortgage 525 31.8 Advance receipt of sale proceeds used for regular objects 526 31.9 Time limit for reinvestment 527 31.10 New sub-section (7) of section 11 528 32 CAPITAL GAIN IN REAL ESTATE TRANSACTIONS 32.1 Immovable property 529 32.2 Period of holding immovable property before transfer to maximize tax advantages 529 32.3 Entering an agreement to sell does not transfer the property 530 32.4 Cash component of consideration should be less than Rs. 20,000 to avoid violation of section 269SS 531 32.5 Immovable property transactions between firm/llp and partners 531 32.6 Membership of Co-operative Society 533 32.7 Mortgage transactions 533 32.8 Reverse Mortgage 534 32.9 Agricultural land 534 32.10 Deemed transfers 535 32.11 Deemed sale consideration - Section 50C 536 32.12 Section 50C vis-a-vis transfers under section 45(2), 45(3) and 45(4) 536 32.13 Exemptions under sections 54, 54EC and 54F 537 32.14 Development agreements (Joint Development Agreements) 539 32.15 Lease right 541 32.16 99 years lease 541
I-29 CONTENTS 32.17 Sub-lease for 97 years 542 32.18 Composite consideration 542 32.19 Single transaction - Whether business 543 32.20 Repurchase of sold property 544 32.21 Mortgage followed by sale 545 32.22 Where auction sale is set aside 546 32.23 Taxation regime for REITs and InVITs 547 32.24 Real Estate Investment Trusts (REITs) 550 32.25 Infrastructure Investment Trust (InVIT) 553 32.26 Income-investment model of REITs and InVITs 555 32.27 Taxation regime introduced by the Finance (No. 2) Act, 2014 for REITs and InVITs 555 32.28 Definition of business trust 559 32.29 Taxation of business trusts 559 32.30 STT levy on transactions in units of a business trust 562 32.31 Taxation of income in the hands of unit holder 562 32.32 Taxation of capital gains arising to sponsor on conversion of SPV shares into units of business trust 566 32.33 No TDS on interest income payable by SPV to business trust 567 32.34 Lower withholding tax rate of 5% on interest income in case of ECBs by business trust 567 33 ALTERNATIVE INVESTMENT FUNDS 33.1 Backdrop 569 33.2 New Special tax regime for AIFs 570 33.3 Taxation of income of investment fund 574 33.4 Taxation of unit holder 575 34 NON-RESIDENTS 34.1 No indexation benefit for non-residents in case of shares/ debentures 577 34.2 Exemptions 579
CONTENTS I-30 34.3 Legal decisions 580 34.4 Transfer of shares by amalgamating foreign company to amalgamated foreign company 583 34.5 Units purchased in foreign currency 584 34.6 Capital gain on transfer of global depository receipts purchased in foreign currency 585 34.7 Capital gain in the case of foreign institutional investors [Section 115AD] 585 34.8 Non-residents referred to in Chapter XII-A 586 34.9 Meaning of the terms used 587 34.10 Working of the Chapter XII-A 587 34.11 Return of income not required to be filed in certain cases 591 35 POWER OF CBDT TO RELAX ANY REQUIREMENT FOR CLAIMING DEDUCTIONS 35.1 Power of CBDT under section 119(2)(c) 592 35.2 Section 119(2)(c) applies to sections 54 to 54GB 593 35.3 Application for relief on plain paper 593 APPENDIX : Gist of relevant Circulars 595