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This Section is applicable to 

Firms

and

Companies 

However it does not include Companies where public is substantially interested

 

If shares received of a company*

without consideration

or

for inadequate consideration of an amount >50000,

by Firm/Company*

then it is taxable under Income from Other Sources

 

*Here Company  does not include Companies where public is substantially interested

 

Taxability

 

Case

Taxability

Without Consideration

If fair market value
 > 50,000
Then whole amount
 Taxable

  (If F.M.V = 40,000,
then not taxable but
if F.M.V = 60,000 then
Whole 60,000 taxable)

For Inadequate Consideration

F.M.V – Consideration)
> 50,000 taxable

 

 

 

Exceptions

This clause shall not apply to folllowing cases of transfer of shares in case of Amalgamation and Demerger 

47(via) Transfer of shares held in an Indian company, in a scheme of amalgamation, by the amalgamating foreign company to an amalgamated foreign company.


47(vic) Transfer of shares held in an Indian company, in a scheme of demerger, by the demerged foreign company to a resulting foreign company.

47(vicb) Transfer by a shareholder, in a business reorganization, of shares held in the predecessor co-operative bank, in consideration of the allotment of shares in the successor co-operative bank.

47(vid) Transfer or issue of shares by the resulting company, in a scheme of demerger, to the shareholders of the demerged company in consideration ofdemerger of the undertaking.

47(vii) Transfer by a shareholder, in a scheme of amalgamation, of shares in the amalgamating company in consideration of allotment to him of shares in the amalgamated Indian company

  1. Income Tax
  2. Income from Other Sources
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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