Taxmanns' Direct Tax Laws & International Taxation (DT) | A.Y. 2024-25

Chapter-Wise Marks Distribution Sr. No.

Chapter

Nov. May Nov. Nov. Jan. July Dec. May Nov. May. Nov. Aver2018 2019* 2019* 2020* 2021* 2021* 2021* 2022* 2022* 2023* 2023* age

0ROlTS AND 'AINS OF "USINESS OR 0ROFESSION

#APITAL 'AINS

Part I - Direct Tax Laws

)NCOME FROM /THER 3OURCES

4A X ON #ONVERSION OF 5NACCOUNTED -ONEY

#LUBBING OF )NCOME

3ET OFF OF LOSSES OR CARRY FORWARD AND SET OFF OF LOSSES

$EDUCTIONS FROM 'ROSS 4OTAL )NCOME

$EDUCTION FOR #O OPERATIVE 3OCIETIES

$EDUCTION FOR 3PECIAL %CONOMIC :ONE

4A X A T I O N OF 0OLITICAL 0ARTIES %LECTORAL 4RUST

I-5

TAXMANN®

I-6 Sr. No.

#(!04%2 7)3% -!2+3 $)342)"54)/. Chapter

Nov. May Nov. Nov. Jan. July Dec. May Nov. May. Nov. Aver2018 2019* 2019* 2020* 2021* 2021* 2021* 2022* 2022* 2023* 2023* age -

4A X A T I O N OF -UTUAL #ONCERNS

! P P L I C A TION V $IVERSION OF )NCOME

% X P E N DITURE ON %XEMPT )NCOME 4A X A T I O N OF #HARITABLE 2ELIGIOUS 4RUST

-INIMUM !LTERNATE 4AX -!4

4AXATION OF &IRMS ,,0 AND !/0 "/)

TAXMANN®

!LTERNATE -INIMUM 4AX !-4

4AXATION OF "USINESS 4RUSTS 2%)4S )NV)4S

! S S E S S MENT 0ROCEDURES

! P P E A L S AND 2EVISIONS

3 U R V E Y 3EARCH AND 3EIZURE

0ROVISIONS TO #OUNTERACT 5NETHICAL 4AX 0RACTICES

, I A B I L I T Y IN 3PECIAL #ASES

! S S E S S MENT OF (5& 4AX $EDUCTION AND #OLLECTION AT 3OURCE

I-7

#(!04%2 7)3% -!2+3 $)342)"54)/. Sr. No.

Chapter

Nov. May Nov. Nov. Jan. July Dec. May Nov. May. Nov. Aver2018 2019* 2019* 2020* 2021* 2021* 2021* 2022* 2022* 2023* 2023* age

4A X A T I O N OF $IGITAL 4RANSACTION

#OLLECTION AND 2ECOVERY OF 4AX

4AX 0LANNING 4AX !VOIDANCE A N D 4A X %VASION )NCLUDING '!!2

)NTEREST - I S C E L L A NEOUS 4OPICS 344 #44 AND )&3#

Part II - International Taxation

4AXATION OF .ON 2ESIDENTS

$ O U B L E 4A X A T I O N 2ELIEF

4 R A N S F E R 0RICING

! D V A N C E 2ULINGS /VERVIEW OF -ODEL 4AX #ONVENTIONS ! P P L I C A TION AND INTERPRETATION OF 4AX 4REATIES & U N D A MENTALS OF "ASE %ROSION AND 0ROFIT 3HIFTING "%03

* &ROM -AY ONWARDS DUE TO INTRODUCTION OF -#1S FOR -ARKS THE REMAINING PAPER OF MARKS CONTAINING DESCRIPTIVE QUESTIONS HAS TOTAL MARKS QUESTIONS WITH OPTIONS WHICH IS QUANTIFY ABOVE !S THE -#1S 0APER IS NOT RELEASED OUTSIDE THE EXAM HALL BY )#!) IT IS NOT POSSIBLE TO QUANTIFY THE ALLOCATION OF MARKS IN -#1S

TAXMANN®

4AX )NCIDENCE IN )NDIA

Previous Exams Trend Analysis Year Jan. 2021

Chapter Name

Marks Category

9ES

0ROFITS AND 'AINS FROM "USINESS OR 0ROFESSION

0RACTICAL

1 a

9ES

!LTERNATE -INIMUM 4AX !-4

0RACTICAL

1 b

9ES

4AX )NCIDENCE IN )NDIA

0RACTICAL

1 a

9ES

4AXATION OF #HARITABLE 2ELIGIOUS 4RUST

0RACTICAL

1 b

9ES

$OUBLE 4AXATION 2ELIEF

0RACTICAL

1 a

9ES

4AX $EDUCTION AND #OLLECTION AT 3OURCE

0RACTICAL

1 b

9ES

4RANSFER 0RICING

0RACTICAL

1 a i

!SSESSMENT 0ROCEDURES

4HEORY

1 a ii

-ISCELLANEOUS 4OPICS 344 #44 AND )&3#

4HEORY

1 a iii

#APITAL 'AINS

4HEORY

1 b

9ES

$EDUCTION FOR #O OPERATIVE 3OCIETIES

0RACTICAL

1 a i

9ES

!SSESSMENT 0ROCEDURES

4HEORY

1 a ii

9ES

0ROVISIONS TO #OUNTERACT 5NETHICAL 4AX 0RACTICES

4HEORY

1 b

9ES

4RANSFER 0RICING

0RACTICAL

9ES

0ROlTS AND 'AINS FROM "USINESS OR 0ROFESSION

0RACTICAL

1 a

!SSESSMENT 0ROCEDURES

4HEORY

OR 1 a

4AXATION OF &IRMS ,,0 !/0 "/)

4HEORY

1 b

9ES

!SSESSMENT 0ROCEDURES

4HEORY

1 c

9ES

$OUBLE 4AXATION 2ELIEF

0RACTICAL

1 a

9ES

4AXATION OF "USINESS 4RUSTS 2%)4S )NV)4S

0RACTICAL

1 b

9ES

4AXATION OF .ON 2ESIDENT

0RACTICAL

1 a

9ES

4AXATION OF #HARITABLE 2ELIGIOUS 4RUST

0RACTICAL

1 b

9ES

$OUBLE 4AXATION 2ELIEF

0RACTICAL

1 a

9ES

4AX $EDUCTION AND #OLLECTION AT 3OURCE

0RACTICAL

I-9

TAXMANN®

July 2021

Question ComNo. pulsory

I-10 Year

TAXMANN®

Dec. 2021

May 2022

02%6)/53 %8!-3 42%.$ !.!,93)3

Question ComNo. pulsory

Chapter Name

Marks Category

1 b

9ES

4RANSFER 0RICING

0RACTICAL

1 a

9ES

,IABILITY IN 3PECIAL #ASES

4HEORY

1 b

9ES

&UNDAMENTALS OF "ASE %ROSION 0ROlT 3HIFTING "%03

4HEORY

1 c

9ES

!PPLICATION )NTERPRETATION OF 4AX 4REATIES

4HEORY

9ES

0ROFITS AND 'AINS FROM "USINESS OR 0ROFESSION

0RACTICAL

1 a i

9ES

3ET OFF OF LOSSES OR CARRY FORWARD AND SET OFF OF LOSSES

0RACTICAL

1 a ii

9ES

#APITAL 'AINS

0RACTICAL

1 b

9ES

4RANSFER 0RICING

0RACTICAL

1 a

9ES

4AXATION OF #HARITABLE 2ELIGIOUS 4RUST

0RACTICAL

1 b

9ES

$OUBLE 4AXATION 2ELIEF

0RACTICAL

1 a i

9ES

4AX $EDUCTION AND #OLLECTION AT 3OURCE

0RACTICAL

1 a ii

9ES

4AX $EDUCTION AND #OLLECTION AT 3OURCE

0RACTICAL

1 b

9ES

4AXATION OF .ON 2ESIDENT

0RACTICAL

1 a i

9ES

!SSESSMENT 0ROCEDURES

4HEORY

1 a ii

9ES

!PPEALS AND 2EVISIONS

4HEORY

1 b

9ES

4AXATION OF $IGITAL 4RANSACTIONS

0RACTICAL

1 a

9ES

4AX 0LANNING 4AX !VOIDANCE AND 4AX %VASION INCLUDING '!!2

4HEORY

1 b

9ES

-ISCELLANEOUS 4OPICS 344 #44 AND )&3#

4HEORY

1 c i

9ES

4RANSFER 0RICING

4HEORY

1 c ii

9ES

$OUBLE 4AXATION 2ELIEF

4HEORY

9ES

0ROFITS AND 'AINS FROM "USINESS OR 0ROFESSION

0RACTICAL

1 a

9ES

4AXATION OF "USINESS 4RUSTS 2%)4S )NV)4S

0RACTICAL

1 b

9ES

4AX )NCIDENCE IN )NDIA

0RACTICAL

1 a

9ES

4AXATION OF #HARITABLE 2ELIGIOUS 4RUST

0RACTICAL

1 b

9ES

$OUBLE 4AXATION 2ELIEF

0RACTICAL

1 a

9ES

4AX $EDUCTION AND #OLLECTION AT 3OURCE

0RACTICAL

1 b

9ES

4RANSFER 0RICING

0RACTICAL

!SSESSMENT 0ROCEDURES

4HEORY

1 a i &IRST !LTERNATIVE

I-11

02%6)/53 %8!-3 42%.$ !.!,93)3

Year

Question ComNo. pulsory 1 a i 3ECOND !LTERNATIVE

Nov. 2022

Marks Category

4AX ON #ONVERSION OF 5NACCOUNTED -ONEY

4HEORY

1 a ii

9ES

)NCOME FROM /THER 3OURCES

4HEORY

1 b

9ES

4AXATION OF $IGITAL 4RANSACTIONS

0RACTICAL

1 a

9ES

4AX 0LANNING 4AX !VOIDANCE AND 4AX %VASION )NCLUDING '!!2

4HEORY

1 b

9ES

,IABILITY IN 3PECIAL #ASES

4HEORY

1 c

9ES

&UNDAMENTALS OF "%03

4HEORY

1 a

9ES

0ROFITS AND 'AINS OF "USINESS OR 0ROFESSION

0RACTICAL

1 a

9ES

!LTERNATE -INIMUM 4AX !-4

0RACTICAL

1 b

9ES

4AX )NCIDENCE IN )NDIA

0RACTICAL

9ES

4AXATION OF #HARITABLE 2ELIGIOUS 4RUST

4HEORY

9ES

4AXATION OF #HARITABLE 2ELIGIOUS 4RUST

4HEORY

1 c

9ES

$OUBLE 4AXATION 2ELIEF

0RACTICAL

1 a

9ES

4AX $EDUCTION AND #OLLECTION AT 3OURCE

0RACTICAL

1 b

9ES

4RANSFER 0RICING

0RACTICAL

1 a i

!PPEALS AND 2EVISIONS

4HEORY

1 a ii

3URVEY 3EARCH AND 3EIZURE

4HEORY

0ROFITS AND 'AINS OF "USINESS OR 0ROFESSION

4HEORY

1 b i

9ES

!DVANCE 2ULINGS

4HEORY

1 b ii

9ES

4AXATION OF $IGITAL 4RANSACTIONS

0RACTICAL

1 a

9ES

4AX 0LANNING 4AX !VOIDANCE AND 4AX %VASION INCLUDING '!!2

4HEORY

1 b

9ES

,IABILITY IN 3PECIAL #ASES

4HEORY

1 c

9ES

&UNDAMENTALS OF "ASE %ROSION AND 0ROFIT 3HIFTING "%03

4HEORY

1 d

9ES

4AX )NCIDENCE IN )NDIA

4HEORY

1 e

9ES

!PPLICATION AND INTERPRETATION OF 4AX 4REATIES

4HEORY

1 a

9ES

0ROFITS AND 'AINS OF "USINESS OR 0ROFESSION

0RACTICAL

1 a I

9ES

3ET OFF OF LOSSES OR CARRY FORWARD AND SET OFF OF LOSSES

0RACTICAL

1 a II

9ES

#APITAL 'AINS

0RACTICAL

1 b

9ES

4AX )NCIDENCE IN )NDIA

0RACTICAL

1 a

9ES

4AXATION OF #HARITABLE 2ELIGIOUS 4RUST

4HEORY

TAXMANN®

1 a 1 b

1 a iii

May 2023

Chapter Name

I-12 Year

02%6)/53 %8!-3 42%.$ !.!,93)3

Question ComNo. pulsory

TAXMANN®

Marks Category

1 b

9ES

$OUBLE 4AXATION 2ELIEF

1 a

9ES

4AX $EDUCTION AND #OLLECTION AT 3OURCE

0RACTICAL

1 b

9ES

4RANSFER 0RICING

0RACTICAL

1 a i

0ROVISIONS TO #OUNTERACT 5NETHICAL 4AX 0RACTICES

4HEORY

1 a ii

!PPEALS AND 2EVISION

4HEORY

1 a iii

#OLLECTION AND 2ECOVERY OF 4AX

4HEORY

9ES

4AXATION OF $IGITAL 4RANSACTIONS

0RACTICAL

1 b

Nov. 2023

Chapter Name

0RACTICAL

1 a I

9ES

-ISCELLANEOUS 4OPICS 344 #44 AND )&3#

4HEORY

1 a II

9ES

4AX 0LANNING 4AX !VOIDANCE AND 4AX %VASION INCLUDING '!!2

4HEORY

1 b I

9ES

!PPLICATION AND INTERPRETATION OF 4AX 4REATIES

4HEORY

1 b II

9ES

!PPLICATION AND INTERPRETATION OF 4AX 4REATIES

4HEORY

1 b III

9ES

/VERVIEW OF -ODEL 4AX #ONVENTIONS

4HEORY

1 a

9ES

0ROFITS AND 'AINS OF "USINESS OR 0ROFESSION

0RACTICAL

1 a

9ES

-INIMUM !LTERNATE 4AX -!4

0RACTICAL

1 b I

9ES

0ROFITS AND 'AINS OF "USINESS OR 0ROFESSION

0RACTICAL

1 b II

9ES

4AXATION OF .ON 2ESIDENTS

0RACTICAL

1 a

9ES

4AXATION OF #HARITABLE 2ELIGIOUS 4RUST

4HEORY

1 b

9ES

$OUBLE 4AXATION 2ELIEF

0RACTICAL

1 a

9ES

4AX $EDUCTION AND #OLLECTION AT 3OURCE

0RACTICAL

1 b

9ES

4RANSFER 0RICING

0RACTICAL

1 a i

!SSESSMENT 0ROCEDURES

4HEORY

1 a ii

-ISCELLANEOUS 4OPICS 344 #44 AND )&3#

4HEORY

1 a iii

0ROFITS AND 'AINS OF "USINESS OR 0ROFESSION

4HEORY

1 b

9ES

4AXATION OF $IGITAL 4RANSACTIONS

0RACTICAL

1 a I

9ES

4AX 0LANNING 4AX !VOIDANCE AND 4AX %VASION INCLUDING '!!2

4HEORY

1 a II

9ES

!SSESSMENT 0ROCEDURES

4HEORY

1 a III

9ES

,IABILITY IN 3PECIAL #ASES

4HEORY

1 b

9ES

&UNDAMENTALS OF "ASE %ROSION AND 0ROlT 3HIFTING "%03

4HEORY

Chapter-Wise Comparison With Study Material Chapter No.

Name of Chapter

Study Material Lesson No.

Part I - Direct Tax Laws 0ROlTS AND 'AINS FROM "USINESS OR 0ROFESSION

#APITAL 'AINS

)NCOME FROM /THER 3OURCES

4AX ON #ONVERSION OF 5NACCOUNTED -ONEY

#LUBBING OF )NCOME

3ET OFF OF LOSSES OR CARRY FORWARD AND SET OFF OF LOSSES

$EDUCTIONS FROM 'ROSS 4OTAL )NCOME

$EDUCTION FOR #O OPERATIVE 3OCIETIES

$EDUCTION FOR 3PECIAL %CONOMIC :ONE

4AXATION OF 0OLITICAL 0ARTIES %LECTORAL 4RUST

%XPENDITURE ON %XEMPT )NCOME

4AXATION OF #HARITABLE 2ELIGIOUS 4RUST

4AXATION OF -UTUAL #ONCERNS

!PPLICATION V $IVERSION OF )NCOME

-INIMUM !LTERNATE 4AX -!4

4AXATION OF &IRMS ,,0 AND !/0 "/)

!LTERNATE -INIMUM 4AX !-4

4AXATION OF "USINESS 4RUSTS 2%)4S )NV)4S

!SSESSMENT 0ROCEDURES

!PPEALS AND 2EVISIONS

3URVEY 3EARCH AND 3EIZURE

0ROVISIONS TO #OUNTERACT 5NETHICAL 4AX 0RACTICES

,IABILITY IN 3PECIAL #ASES

I-13

TAXMANN®

I-14

#(!04%2 7)3% #/-0!2)3/. 7)4( 345$9 -!4%2)!,

Chapter No.

Name of Chapter

Study Material Lesson No.

!SSESSMENT OF (5&

4AX $EDUCTION AND #OLLECTION AT 3OURCE

4AXATION OF $IGITAL 4RANSACTIONS

#OLLECTION AND 2ECOVERY OF 4AX

)NTEREST

-ISCELLANEOUS 4OPICS 344 #44 AND )&3#

4AX 0LANNING 4AX !VOIDANCE AND 4AX %VASION INCLUDING '!!2

TAXMANN®

Part II - International Taxation

4AX )NCIDENCE IN )NDIA

4AXATION OF .ON 2ESIDENTS

$OUBLE 4AXATION 2ELIEF

4RANSFER 0RICING

!DVANCE 2ULINGS

/VERVIEW OF -ODEL 4AX #ONVENTIONS

!PPLICATION AND INTERPRETATION OF 4AX 4REATIES

&UNDAMENTALS OF "%03

Contents PAGE

Chapter-wise Marks Distribution

I-5

Previous Exams Trend Analysis

I-9

Chapter-wise Comparison With Study Material

I-13

PART I DIRECT TAX LAWS (70 MARKS)

PROFITS AND GAINS OF BUSINESS OR PROFESSION

1.3

Chapter 2 CAPITAL GAINS

2.1

Chapter 3 INCOME FROM OTHER SOURCES

3.1

Chapter 4 TAX ON CONVERSION OF UNACCOUNTED MONEY

4.1

Chapter 5 INCOME OF OTHER PERSONS, INCLUDED IN ASSESSEE’S TOTAL INCOME

(CLUBBING OF INCOME)

5.1

Chapter 6 SET-OFF OF LOSSES OR CARRY FORWARD AND SET-OFF OF LOSSES

6.1

Chapter 7 DEDUCTIONS FROM GROSS TOTAL INCOME

I-15

7.1

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Chapter 1

I-16

#/.4%.43 PAGE

Chapter 8 DEDUCTION FOR CO-OPERATIVE SOCIETIES

8.1

Chapter 9 DEDUCTION FOR SPECIAL ECONOMIC ZONE

9.1

Chapter 10 TAXATION OF POLITICAL PARTIES & ELECTORAL TRUST

10.1

Chapter 11 EXPENDITURE ON EXEMPT INCOME

11.1

Chapter 12 TAXATION OF CHARITABLE/ RELIGIOUS TRUSTS

12.1

Chapter 13 TAXATION OF MUTUAL CONCERNS

13.1

TAXMANN®

Chapter 14 APPLICATION v. DIVERSION OF INCOME

14.1

Chapter 15 MINIMUM ALTERNATE TAX (MAT)

15.1

Chapter 16 TAXATION OF FIRMS, LLP AND AOP/BOI

16.1

Chapter 17 ALTERNATE MINIMUM TAX (AMT)

17.1

Chapter 18 TAXATION OF BUSINESS TRUSTS (REITs, InvITs)

18.1

Chapter 19 ASSESSMENT PROCEDURES

19.1

Chapter 20 APPEALS AND REVISIONS

20.1

Chapter 21 SURVEY, SEARCH AND SEIZURE

21.1

Chapter 22 PROVISIONS TO COUNTERACT UNETHICAL TAX PRACTICES

22.1

#/.4%.43

I-17 PAGE

Chapter 23 LIABILITY IN SPECIAL CASES

23.1

Chapter 24 ASSESSMENT OF HUF

24.1

Chapter 25 TAX DEDUCTION AND COLLECTION AT SOURCE

25.1

Chapter 26 TAXATION OF DIGITAL TRANSACTIONS

26.1

Chapter 27 COLLECTION AND RECOVERY OF TAX

27.1

Chapter 28 INTEREST

28.1

Chapter 29 29.1

Chapter 30 TAX PLANNING, TAX AVOIDANCE AND TAX EVASION (INCLUDING GAAR)

30.1

PART II INTERNATIONAL TAXATION (30 MARKS) Chapter 31 TAX INCIDENCE IN INDIA

31.3

Chapter 32 TAXATION OF NON-RESIDENTS

32.1

Chapter 33 DOUBLE TAXATION RELIEF

33.1

Chapter 34 TRANSFER PRICING

34.1

Chapter 35 ADVANCE RULINGS

35.1

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MISCELLANEOUS TOPICS, STT/ CTT AND IFSC

I-18

#/.4%.43 PAGE

Chapter 36 OVERVIEW OF MODEL TAX CONVENTIONS

36.1

Chapter 37 APPLICATION AND INTERPRETATION OF TAX TREATIES

37.1

Chapter 38

TAXMANN®

FUNDAMENTALS OF BEPS

38.1

20?8C0; 608=B

CHAPTER

Q1. On 25-11-2023, A gave power of attorney and possession to B in respect of a vacant land acquired 10 years ago. The sale deed was executed in April, 2024. In which assessment year, the capital gain is chargeable to tax? [CA Final May 2010] [4 Marks] Ans. !S PER SECTION THE CHARGING SECTION FOR THE HEAD @#APITAL GAINS ANY PROFITS AND GAINS ARISING FROM TRANSFER OF A CAPITAL ASSET SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD CAPITAL GAINS in the previous year in which transfer took place.

Q2. Can reference be made to the Valuation Officer u/s 55A where the A.O. is of the view that in the context of computation of capital gains, the value of asset as on 1-4-2001 adopted by the assessee is more than the FMV? [CA Final May 2010] [4 Marks] 2.1

TAXMANN®

&URTHER THE DEFINITION OF @4RANSFER AS CONTAINED IN SECTION 47 INCLUDES inter alia ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION ! OF THE 4RANSFER OF 0ROPERTY !CT !LSO IN SECTION # Explanation 2 to section 50C PROVIDES AS UNDER &OR THE PURPOSE OF THIS SECTION THE EXPRESSION “assessablev MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAVE NOTWITHSTANDING CONTAINED IN ANY OTHER LAW FOR A TIME BEING IN FORCE ADOPTED OR ASSESSED IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY 4HE TERM assessable ALSO COVERS TRANSFERS EXECUTED THROUGH POWER OF ATTORNEY WITHIN THE SCOPE OF SECTION # 4HUS WHEN THE ASSESSEE EXECUTES POWER OF ATTORNEY AND POSSESSION IS GIVEN THE TRANSFER IS CHARGEABLE TO CAPITAL GAIN IN SUCH YEAR 4HUS ON COMBINE READING OF ABOVE PROVISIONS CAPITAL GAIN SHALL BE CHARGEABLE TO TAX IN THE YEAR WHEN THE POWER OF ATTORNEY AND POSSESSION WAS GIVEN TO -R " IN RESPECT OF THE VACANT LAND

2.2

0!24 ) $)2%#4 4!8 ,!73

Ans. 3ECTION ! DEALING WITH @2EFERENCE TO 6ALUATION /FFICER PROVIDES THAT THE ! / MAY REFER THE VALUATION OF A CAPITAL ASSET TO THE VALUATION OFFICER WITH A VIEW TO ASCERTAIN THE &-6 OF THE CAPITAL ASSET FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN IN A CASE WHERE THE VALUE OF ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER AND THE ! / IS OF THE OPINION THAT the value so claimed is at variance with the FMV of the asset.

TAXMANN®

4HEREFORE THE ! / CAN MAKE A REFERENCE TO THE 6ALUATION /FFICER FOR VALUATION OF THE CAPITAL ASSET IN A CASE WHERE THE &-6 OF THE ASSET AS ON IS TAKEN AS THE COST OF THE ASSET AND HE IS OF THE VIEW THAT THERE IS A variance BETWEEN THE VALUE AS ON CLAIMED BY THE ASSESSEE IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER AND THE FAIR MARKET VALUE OF THE ASSET ON THAT DATE Q3. A sold a house to his friend B on 1-11-2023, for a consideration of ` 25,00,000. The Sub-Registrar refused to register the document for the said value, as according to him, Stamp Duty had to be paid of ` 45,00,000 which was the Government Guideline Value. Mr. A preferred an appeal to the Revenue Divisional Officer, who fixed the value of the house as ` 32,00,000 (` 22,00,000 for Land, balance for Building portion). The differential Stamp Duty was paid, accepting the said value determined. Assuming that the FMV is ` 32,00,000, what are the tax implications in the hands of Mr. A and Mr. B for the A.Y. 2024-25? Mr. A had purchased the Land on 1-6-2019 for ` 5,19,000 & completed the construction of house on 1-12-2021 for ` 14,00,000. CII: FY 2018-19: 280, FY 2019-20: 289, FY 2021-22: 317, FY 2022-23: 331, FY 2023-24:348 [CA Final May 2010] [4 Marks] Ans. Computation of Capital Gains for A.Y. 2024-25

Land (`) Building (`)

3ALE #ONSIDERATION 2EFER .OTE

,ESS %XPENSES ON TRANSFER .ET CONSIDERATION ,ESS )NDEXED #/! ,AND ;` = "EING ,4#!

"UILDING "EING 34#! #APITAL GAIN LOSS

15,75,045

(4,00,000)

Note: 6ALUE FIXED IN APPEAL i.e. ` ` FOR ,AND AND ` FOR "UILDING SHALL BE TAKEN AS 3ALE #ONSIDERATION

2.3

#( #!0)4!, '!).3

Tax Implication: Mr. A: 34#, CAN BE 3ET OFF AGAINST ,4#' U S 4HEREFORE ,4#' OF ` ` ` IS TAXABLE AT Mr. B: 2ECEIPT OF IMMOVABLE PROPERTY FOR INADEQUATE CONSIDERATION i.e. STAMP DUTY VALUE EXCEEDS THE CONSIDERATION BY MORE THAN HIGHER OF ` OR OF CONSIDERATION WILL BE CHARGEABLE U S x AS @)NCOME FROM /THER 3OURCES 4AXABLE AMOUNT 3TAMP DUTY n #ONSIDERATION ` ` ` Q4. A resident woman (individual) sold a house property on 16-1-2024. On the said transaction, she earned a long-term capital gain of ` 1,01,50,000. She invested a sum of ` 50,00,000 in capital gains bonds specified in section 54EC on 5-3-2024. She further invested a sum of ` 50,00,000 in the same bonds on 5-5-2024. Her other income for the financial year 2023-24 was ` 56,000. Compute the tax payable by her for the A.Y. 2024-25 assuming that she has exercised the option of shifting out of the default tax regime u/s 115BAC. [CA Final Nov. 2010] [6 Marks]

(OWEVER THE AMOUNT OF INVESTMENTS IN THE BONDS BY THE ASSESSEE DURING THE FINANCIAL YEAR IN WHICH SUCH TRANSFER HAS TAKEN PLACE AND IN SUBSEQUENT FINANCIAL YEAR SHALL NOT EXCEED ` LAKHS IN AGGREGATE 4HEREFORE EXEMPTION IN RESPECT OF AMOUNT INVESTED IN THE BONDS ON SHALL NOT BE AVAILABLE Computation of taxable income for the A.Y. 2024-25

,ONG TERM CAPITAL GAINS

,ESS %XEMPTION U S %#

4AXABLE ,ONG TERM CAPITAL GAIN

/THER INCOME

4OTAL )NCOME

Computation of Income-Tax payable: !S PER SECTION IN CASE OF A RESIDENT INDIVIDUAL THE UNEXHAUSTED BASIC EXEMPTION LIMIT CAN BE EXHAUSTED AGAINST LONG TERM CAPITAL GAINS AND TAX WOULD BE LEVIABLE ON THE BALANCE LONG TERM CAPITAL GAINS 4HEREFORE THE BASIC EXEMPTION LIMIT OF ` SHOULD BE FIRST ADJUSTED AGAINST OTHER INCOME OF ` AND THE UNEXHAUSTED BASIC EXEMPTION LIMIT OF ` SHOULD BE ADJUSTED AGAINST THE LONG TERM CAPITAL GAINS OF `

TAXMANN®

Ans. 4O CLAIM EXEMPTION U S %# THE ASSESSEE HAS TO INVEST IN SPECIFIED BONDS OF 2%#, OR .(!) WITHIN MONTHS FROM THE DATE OF TRANSFER OF THE LONG TERM CAPITAL ASSET

2.4

0!24 ) $)2%#4 4!8 ,!73

4HE BALANCE LONG TERM CAPITAL GAINS OF ` WOULD BE TAXABLE ` PLUS 3URCHARGE PLUS #ESS 4HEREFORE THE TAX PAYABLE BY THE ASSESSEE WOULD BE `

TAXMANN®

Q5. Hari has acquired a residential house property in Delhi on 1st April, 2011 for ` 10,00,000 and decided to sell the same on 3rd May, 2013 to Ms. Pari and an advance of ` 25,000 was taken from her. The balance money was not paid by Ms. Pari and Hari has forfeited the entire advance sum. On 3rd June, 2023, he sold this house to Mr. Suri for ` 35,00,000. In the meantime, on 4th April, 2023, he had purchased a residential house in Delhi for ` 8,00,000, where he was staying with his family on rent for the last 5 years and paid the full amount as per the purchase agreement. However, Hari does not possess any legal title till 31st March, 2024, as such transfer was not registered with the registration authority. Hari has purchased another old house in Surat on 14th October, 2023 from Mr. X, an Indian resident, by paying ` 5,00,000 and the purchase was registered with the appropriate authority. Determine the taxable capital gain arising from above transactions in the hands of Hari for A.Y. 2024-25. [CA Final Nov. 2010] [5 Marks] Ans. Computation of taxable capital gain of Mr. Hari for the A.Y. 2024-25 ` 3ALE #ONSIDERATION

,ESS )NDEXED COST OF ACQUISITION .OTE

,ONG 4ERM #APITAL 'AIN

,ESS %XEMPTION U S IN RESPECT OF INVESTMENT IN HOUSE AT $ELHI AND 3URAT .OTE 4AXABLE ,ONG 4ERM #APITAL 'AIN

Notes: #OMPUTATION OF INDEXED COST OF ACQUISITION ` #OST OF ACQUISITION Less: !DVANCE TAKEN AND FORFEITED AS PER SEC #OST FOR THE PURPOSE OF )NDEXATION

)NDEXED COST OF ACQUISITION ` )N ORDER TO AVAIL EXEMPTION U S THE RESIDENTIAL HOUSE PROPERTY SHOULD BE PURCHASED WITHIN YEAR BEFORE OR WITHIN YEARS AFTER THE DATE OF TRANSFER OR IT SHOULD BE CONSTRUCTED WITHIN A PERIOD OF YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ,4 RESIDENTIAL (0

#( #!0)4!, '!).3

2.5

!S PER THE AMENDMENT MADE BY THE &INANCE !CT AN INDIVIDUAL CAN CLAIM EXEMPTION U S IN RESPECT OF PURCHASE OF two residential house properties IN )NDIA PROVIDED THE CAPITAL GAINS DOES NOT EXCEED ` CRORE (ERE IN THIS CASE SINCE THE CAPITAL GAINS DOES NOT EXCEED ` CRORES (ARI CAN CLAIM EXEMPTION IN RESPECT OF BOTH THE HOUSE PROPERTIES U S 7HERE THE ASSESSEE EXERCISED THE OPTION TO CLAIM EXEMPTION IN RESPECT OF TWO RESIDENTIAL HOUSE PROPERTIES HE CANNOT SUBSEQUENTLY ENTITLED TO EXERCISE THE OPTION FOR THE SAME OR ANY OTHER ASSESSMENT YEAR )N THIS CASE (ARI HAS PURCHASED THE RESIDENTIAL HOUSE IN $ELHI WITHIN ONE YEAR BEFORE THE DATE OF TRANSFER AND PAID THE FULL AMOUNT OF ` AS PER THE PURCHASE AGREEMENT THOUGH HE DOES NOT POSSESS ANY LEGAL TITLE TILL SINCE THE TRANSFER WAS NOT REGISTERED WITH THE REGISTRATION AUTHORITY (OWEVER for the purpose of claiming exemption under section 54, holding of legal title is not necessary. )F THE TAXPAYER PAYS THE FULL CONSIDERATION IN TERMS OF THE PURCHASE AGREEMENT WITHIN THE STIPULATED PERIOD THE EXEMPTION UNDER SECTION WOULD BE AVAILABLE

Q6. “Any transfer of a capital asset or intangible asset by a private company or unlisted public company to a LLP or any transfer of share or shares held in a company by a shareholder on conversion of a company into a LLP in accordance with section 56 and section 57 of the Limited Liability Partnership Act, 2008, shall not be regarded as a transfer for the purposes of levy of capital gains tax under section 45 subject to fulfilment of certain conditions”. Explain in the context of the provisions contained in the Act. [CA Final May 2011] [6 Marks] Ans. !NY TRANSFER OF A CAPITAL ASSET OR INTANGIBLE ASSET BY A PRIVATE COMPANY OR UNLISTED PUBLIC COMPANY TO AN ,,0 OR ANY TRANSFER OF A SHARE s HELD IN A COMPANY BY A SHAREHOLDER ON CONVERSION OF A COMPANY INTO AN ,,0 SHALL NOT BE REGARDED AS A TRANSFER FOR THE PURPOSE OF LEVY OF CAPITAL GAINS ON FULFILMENT OF THE FOLLOWING CONDITIONS a !LL THE ASSETS AND LIABILITIES OF THE COMPANY IMMEDIATELY BEFORE THE CONVERSION BECOME THE ASSETS AND LIABILITIES OF THE ,,0 b !LL THE SHAREHOLDERS OF THE COMPANY IMMEDIATELY BEFORE THE CONVERSION BECOME THE PARTNERS OF THE ,,0 AND THEIR CAPITAL CONTRIBUTION AND PROFIT SHARING RATIO IN THE ,,0 ARE IN THE SAME PROPORTION AS THEIR SHAREHOLDING IN THE COMPANY ON THE DATE OF CONVERSION

TAXMANN®

(ARI HAS ALSO PURCHASED OLD HOUSE IN 3URAT ON BY PAYING ` AND THEREFORE HE SHALL BE ELIGIBLE TO CLAIM EXEMPTION U S IN RESPECT OF BOTH THE HOUSE PROPERTY PURCHASED i.e. ` ` `

2.6

0!24 ) $)2%#4 4!8 ,!73

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c 4HE 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 ,,0 d 4HE AGGREGATE OF THE PROFIT SHARING RATIO OF THE SHAREHOLDERS OF THE COMPANY IN THE ,,0 SHALL NOT BE LESS THAN AT ANY TIME DURING THE PERIOD OF YEARS FROM THE DATE OF CONVERSION e 4HE TOTAL SALES TURNOVER OR GROSS RECEIPTS IN BUSINESS OF THE COMPANY IN ANY OF THE 0 9 PRECEDING THE 0 9 IN WHICH THE CONVERSION TAKES PLACE DOES NOT EXCEED ` LAKHS ea 4HE TOTAL VALUE OF THE ASSETS AS APPEARING IN THE BOOKS OF ACCOUNT OF THE COMPANY IN ANY OF THE THREE PREVIOUS YEARS PRECEDING THE PREVIOUS YEAR IN WHICH CONVERSION TAKES PLACE DOES NOT EXCEED ` CRORES AND f .O 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 YEARS FROM THE DATE OF CONVERSION Q7. Mr. X transferred his residential house to Y for ` 11 lakh on 1st April, 2023. The value of the said house as per Stamp Valuation Authority was ` 16 lakh. Mr. Y is a childhood friend of Mr. X. Mr. X gifted a plot of land (purchased by him on 1st August, 2020) to Mr. Y on 1st July, 2023. The value as per Stamp Valuation Authority is ` 8 lakh. Mr. Y sold the land on 1st March, 2024 at ` 14 lakh. Compute the income of Mr. Y chargeable under the heads “Capital Gains” and “Income from other sources” for Assessment Year 2024-25. [CA Final Nov 2011] [5 Marks] Ans.

Computation of income of Mr. Y for A.Y. 2024-25 `

Capital Gains 3ALE CONSIDERATION

,ESS #OST OF ACQUISITION DEEMED TO BE THE STAMP VALUE CHARGED TO TAX U S x AS PER SECTION .OTE

3HORT TERM CAPITAL GAINS .OTE

Income from other sources 2ESIDENTIAL (OUSE RECEIVED FOR INADEQUATE CONSIDERATION .OTE

3TAMP DUTY VALUE OF PLOT OF LAND RECEIVED WITHOUT CONSIDERATION ;TAXABLE U S x = .OTE

Total Income

19,00,000

#( #!0)4!, '!).3

2.7

Notes:

Q8. What are the consequences if the amount deposited in Capital Gains Account Scheme to avail exemption from capital gains is not utilised within the stipulated time? Is there any difference in the tax treatment in the event of death of the assessee before the stipulated time? [CA Final May 2012] [3 Marks] Ans. 7HERE THE AMOUNT DEPOSITED IN #APITAL 'AINS !CCOUNTS 3CHEME TO AVAIL EXEMPTION IS NOT UTILIZED FOR THE SPECIFIED PURPOSE MENTIONED UNDER THE RESPECTIVE SECTION i.e., SECTIONS " ' ETC WITHIN THE SPECIFIED PERIOD OF TWO YEARS OR THREE YEARS AS THE CASE MAY BE THEN THE unutilized amount shall be chargeable as capital gain in the previous year in which the specified period of two years or three years, as the case may be, expires. The nature of the capital gain shall be same AS THE NATURE OF THE CAPITAL GAIN WHICH WAS CLAIMED AS EXEMPTION UNDER THE SECTION EARLIER 4HE TAX TREATMENT IN THE EVENT OF DEATH OF THE ASSESSEE BEFORE THE STIPULATED TIME WHICH RESULTS IN RECEIVING OF THE AMOUNT BY HIS LEGAL HEIRS WILL BE DIFFERENT 4HE #"$4 HAS IN Circular No.743 dated 6-5-1996 CLARIFIED THAT

TAXMANN®

!S PER 3EC x WHERE ANY IMMOVABLE PROPERTY IS ACQUIRED FOR INADEQUATE CONSIDERATION AND IF THE STAMP DUTY VALUE EXCEEDS THE CONSIDERATION BY MORE THAN HIGHER OF ` OR OF THE CONSIDERATION THE DIFFERENCE BETWEEN STAMP DUTY VALUE OF THE PROPERTY AND THE CONSIDERATION SHALL BE TAXABLE AS INCOME FROM OTHER SOURCES 4HE HIGHER IN ` AND OF THE CONSIDERATION ;i.e. ` ` = IS ` AND SINCE THE DIFFERENCE BETWEEN THE STAMP DUTY VALUE AND CONSIDERATION EXCEEDS ` THE DIFFERENCE OF ` 5,00,000 i.e. ` ` IS chargeable to tax IN THE HANDS OF -R 9 3EC x IS ALSO ATTRACTED WHERE THE IMMOVABLE PROPERTY IS TRANSFERRED WITHOUT CONSIDERATION IF THE STAMP DUTY VALUE OF SUCH PROPERTY EXCEEDS ` )N THIS CASE SINCE -R 9 HAS RECEIVED A PLOT OF LAND FROM -R 8 A NON RELATIVE WITHOUT CONSIDERATION AND THE STAMP DUTY VALUE OF ` LAKH EXCEEDS ` THE ENTIRE STAMP DUTY VALUE OF ` LAKH IS CHARGEABLE TO TAX U S x 3ECTION PROVIDES THAT WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF SUCH PROPERTY WHICH HAS BEEN SUBJECT TO TAX U S x THE COST OF ACQUISITION SHALL BE DEEMED TO BE THE VALUE TAKEN INTO ACCOUNT FOR THE PURPOSE OF SECTION x 4HEREFORE ` LAKH WOULD BE THE COST OF ACQUISITION IN THIS CASE 7HERE COST IS COMPUTED AS PER 3EC THE PERIOD OF HOLDING OF PREVIOUS OWNER IS NOT TO BE INCLUDED AND THEREFORE THE RESULTANT CAPITAL GAINS WILL BE SHORT TERM CAPITAL GAINS

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0!24 ) $)2%#4 4!8 ,!73

IN THE EVENT OF DEATH OF AN INDIVIDUAL BEFORE THE STIPULATED PERIOD THE UNUTILIZED AMOUNT WOULD NOT BE CHARGEABLE TO TAX IN THE HANDS OF THE LEGAL HEIRS OF THE DECEASED INDIVIDUAL SINCE SUCH UNUTILIZED AMOUNT IS NOT INCOME BUT IS A PART OF THE ESTATE DEVOLVING UPON THEM Q9. State the cases where the benefit of indexation of cost is not available for determination of capital gains. [CA Final May 2012] [7 Marks] Ans. #ASES WHERE BENEFIT OF INDEXATION OF COST IS NOT AVAILABLE FOR DETERMINATION OF CAPITAL GAINS ARE AS FOLLOWS 4RANSFER OF CAPITAL ASSETS HELD FOR NOT MORE THAN MONTHS MONTHS IN CASE OF LISTED SHARES UNITS ETC AND MONTHS IN CASE OF UNLISTED SHARES AND IMMOVABLE PROPERTY SINCE CAPITAL GAINS ARISING THEREFROM WOULD BE A SHORT TERM CAPITAL GAINS 4RANSFER OF DEPRECIABLE ASSETS WHERE COMPUTATION IS GOVERNED BY SECTION SINCE CAPITAL GAINS ARISING THEREFROM WOULD ALWAYS BE SHORT TERM CAPITAL GAINS EVEN IF THEY ARE HELD FOR MORE THAN MONTHS TAXMANN®

4RANSFER OF UNDERTAKING OR DIVISION IN A SLUMP SALE U S " 4RANSFER OF BONDS DEBENTURES OTHER THAN CAPITAL INDEXED BONDS ISSUED BY THE 'OVERNMENT 4HIRD PROVISO TO SECTION 4RANSFER OF SHARES IN OR DEBENTURES OF AN )NDIAN COMPANY ACQUIRED BY A NON RESIDENT IN FOREIGN CURRENCY &IRST PROVISO TO SECTION 4RANSFER OF A FOREIGN EXCHANGE ASSET BY A NON RESIDENT )NDIAN WHO OPTS TO BE GOVERNED BY THE PROVISIONS OF #HAPTER 8)) ! 3ECTION $ 4RANSFER OF BONDS AND '$2S BY NON RESIDENT REFERRED TO IN 3EC !# 4RANSFER OF UNITS OF 5NIT 4RUST OF )NDIA OR A -UTUAL &UND SPECIFIED U S 23D PURCHASED IN FOREIGN CURRENCY BY AN OVERSEAS FINANCIAL ORGANISATION REFERRED TO AS /FFSHORE &UND 3ECTION !" 4RANSFER OF SECURITIES BY &OREIGN )NSTITUTIONAL )NVESTORS 3EC !$ 4RANSFER OF UNLISTED SECURITIES BY A NON RESIDENT AS PER PROVISIONS OF 3EC ,ONG TERM CAPITAL GAINS REFERRED TO IN 3EC ! Q10. PQR Ltd. has two units–one engaged in manufacture of Computer Hardware and the other involved in developing Software. As a restructuring drive, the Company has decided to sell its Software Unit as a going concern by way of slump sale for ` 385 Lakhs to a new Company called S Ltd., in which it holds 74% Equity Shares. The FMV of the capital assets of the unit on the date of transfer calculated as per Rule 11UAE is ` 400 lakhs. The Balance Sheet of PQR Ltd. as on 31st March 2024, being the date on which software unit has been transferred, is as under:

2.9

#( #!0)4!, '!).3

Liabilities Paid-up Share Capital

` in Lakhs Assets 300 Fixed Assets

` in Lakhs

General Reserve

150

Hardware Unit

170

Share Premium

Software Unit

200

Revaluation Reserve

120 Debtors

Current Liabilities

Hardware Unit

140

Software Unit

110

Hardware Unit

Software Unit

90 Inventories Hardware Unit

Software Unit

750

Following additional information are furnished by the Management: (i) The Software Unit is in existence since May, 2020.

(iii) Fixed Assets of Software Unit mirrored at ` 140 Lakhs (` 200 Lakhs minus land value ` 60 Lakhs) is Written Down Value of Depreciable Assets as per books of account. However, the Written Down Value of these Assets u/s 43(6) of the Income-tax Act is ` 90 Lakhs. Required: (a) Ascertain the tax liability, which would arise from slump sale to PQR Ltd. (b) What would be your advice as a Tax Consultant to make the restructuring plan to the Company more tax savvy, without changing the amount of sale consideration? [CA Final Nov. 2012, May 2011] [10 Marks] Ans. (a) !S PER SECTION " ANY PROFITS OR GAINS ARISING FROM THE SLUMP SALE SHALL BE TAXABLE AS LONG TERM CAPITAL GAINS IF THE UNDERTAKING IS HELD FOR MORE THAN MONTHS OR MORE )NDEXATION BENEFIT IS NOT AVAILABLE #APITAL GAINS h3LUMP SALE CONSIDERATIONv minus h.ET WORTH OF THE 5NDERTAKING OR DIVISIONv h.ET WORTHv !GGREGATE VALUE OF TOTAL ASSETS OF THE UNDERTAKING DIVISION minus 6ALUE OF TOTAL LIABILITIES OF SUCH UNDERTAKING OR DIVISION as appearing in the books of account.

TAXMANN®

(ii) Fixed Assets of Software Unit includes land which was purchased at ` 40 Lakhs in the year 2017 and revalued at ` 60 Lakhs as on March 31, 2024.

2.10

0!24 ) $)2%#4 4!8 ,!73

&OR COMPUTING THE @.ET 7ORTH NON DEPRECIABLE ASSETS ARE TO BE TAKEN AT THEIR BOOK VALUES )N CASE OF DEPRECIABLE ASSETS THE WRITTEN DOWN VALUE OF SUCH ASSETS SHALL BE COMPUTED AS PER SECTION #HANGE IN THE VALUE OF ASSETS ON ACCOUNT OF revaluation of assets shall be ignored FOR THE PURPOSES OF COMPUTING THE NET WORTH Computation of Tax Liability arising on Slump Sale

TAXMANN®

` in Lakhs 3ALE #ONSIDERATION AS PER 2ULE 5!%

,ESS .ET 7ORTH OF "USINESS 4RANSFERRED .OTE

,ONG 4ERM #APITAL 'AIN 5NIT OWNED FOR MORE THAN -ONTHS

4AX ON ABOVE AT U S ;` ,AKHS =

!DD 3URCHARGE AT % 3INCE THE 4OTAL )NCOME EXCEEDS ` #RORE

4AX AND 3URCHARGE 0AYABLE

!DD (EALTH %DUCATION CESS

4OTAL 4AX ,IABILITY UNDER 3LUMP 3ALE

Note: 1. Net Worth of Software Unit: ` in Lakhs $EPRECIABLE !SSETS AT 7$6

,AND AT "OOK 6ALUE 2EVALUED FIGURE SHALL NOT BE CONSIDERED

$EBTORS AT "OOK 6ALUE

)NVENTORIES AT "OOK 6ALUE

Total Assets

Less: Liabilities

.ET 7ORTH OF 3OFTWARE 5NIT

2. "ENEFIT OF INDEXATION IS NOT AVAILABLE AS THE TRANSFER IS ON SLUMP SALE BASIS (b) Modification in the Restructuring Plan Option 1: S Ltd - 100% Subsidiary 012 ,TD MAY HOLD %QUITY 3HARES OF 3 ,TD i.e. (OLDING #OMPANY AND THEN THE 3OFTWARE 5NIT TO BE TRANSFERRED AFTER 3HARES ARE ACQUIRED BY 012 ,TD

2.11

#( #!0)4!, '!).3

Conditions: "UT THE ABOVE TRANSFER REQUIRES FULFILMENT OF FOLLOWING CONDITIONS a (OLDING #O SHOULD NOT CEASE TO HOLD 3HARES FOR 9EARS FROM DATE OF TRANSFER OF SUCH BUSINESS OR b 3UBSIDIARY #O SHALL NOT CONVERT THE #APITAL !SSETS INTO 3TOCK IN 4RADE WITHIN YEARS Result: !SSETS TRANSFERRED BY THE (OLDING #OMPANY TO ITS )NDIAN 3UBSIDIARY #OMPANY IS NOT A TRANSFER U S iv AND THE TRANSACTION WOULD not attract Capital Gains. Option 2: S Ltd - Demerger 012 ,IMITED MAY GO IN FOR $EMERGER AND TRANSFER THE 3OFTWARE 5NIT TO 3 ,TD Result: 4RANSFER OF #APITAL !SSETS BY A $EMERGED #OMPANY 012 ,TD TO A 2ESULTING #OMPANY IS not a transfer U S vib IF THE 2ESULTING #OMPANY IS AN )NDIAN #OMPANY

The company utilised the sum of ` 80 lakhs in the following manner: (i) Purchase of new machinery during April, 2024 ` 70 lakhs (including ` 10 lakhs for purchase of computers). (ii) Deposit in specified bank on 25th September, 2024 ` 6 lakhs. (iii) Remaining ` 4 lakhs was held as Cash balance. The due date for filing return of income for Mr. Shakti for A.Y. 2024-25 is 31st October, 2024. Assume that he files return on 28.10.2024. Compute the taxable capital gain arising from the above transaction for Assessment Year 2024-25. [CA Final May 2013] [6 Marks] Ans. Computation of taxable capital gains of Mr. Shakti for A.Y. 2024-25 ` 'ROSS SALE CONSIDERATION

Less: %XPENSES ON TRANSFER OF THE GROSS SALE CONSIDERATION

.ET SALE CONSIDERATION

Less: )NDEXED COST OF ACQUISITION ` ×

,ONG TERM CAPITAL GAINS

TAXMANN®

Q11. Mr. Shakti purchased a residential house in March, 2012 for ` 22 lakhs. He sold the house on 1st December, 2023 for ` 100 lakhs. He paid brokerage at 2% on sale price. He invested ` 80 lakhs in April, 2024 in equity shares of Shakti Private Limited, an eligible start-up. Mr. Shakti holds 80% of share capital of the company.

2.12

0!24 ) $)2%#4 4!8 ,!73

` Less: %XEMPTION UNDER SECTION '" 3EE .OTE BELOW ` × ` `

4AXABLE #APITAL 'AINS

Deemed cost of new plant and machinery for exemption u/s 54GB: ` 0URCHASE COST OF NEW PLANT AND MACHINERY ACQUIRED IN !PRIL INCLUDING COMPUTERS !MOUNT DEPOSITED IN THE SPECIFIED BANK BEFORE THE DUE DATE OF FILING OF RETURN

$EEMED COST OF NEW PLANT AND MACHINERY FOR EXEMPTION U S '"

TAXMANN®

Note: %XEMPTION U S '" CAN BE AVAILED ON ,4#' ON TRANSFER OF A RESIDENTIAL HOUSE SINCE ALL THE CONDITIONS GIVEN BELOW ARE FULFILLED BY -R 3HAKTI i 4HE SALE PROCEEDS ARE USED FOR SUBSCRIPTION IN THE EQUITY SHARES OF AN ELIGIBLE START UP ii -R 3HAKTI HOLDS MORE THAN OF THE SHARE CAPITAL IN THE SAID COMPANY iii &URTHER THE AMOUNT OF SUBSCRIPTION AS SHARE CAPITAL HAS BEEN UTILIZED BY THE ELIGIBLE START UP FOR PURCHASE OF NEW PLANT AND MACHINERY WITHIN A PERIOD OF ONE YEAR FROM THE DATE OF SUBSCRIPTION BY THE ASSESSEE Q12. Tani purchased a land at a cost of ` 34 lakhs in the financial year 2011-12 and held the same as her capital asset till 31st March, 2020. Tani started her real estate business on 1st April, 2020 and converted the said land into stock-in-trade of her business on the said date, when the fair market value of the land was ` 150 lakhs. She constructed 20 flats of equal size, quality and dimension. Cost of construction of each flat is ` 8 lakhs. Construction was completed in December, 2023. She sold 15 flats at ` 20 lakhs per flat between Jan., 2024 and March, 2024. Remaining 5 flats were held in stock as on 31-03-2024. She invested ` 50 lakhs in bonds issued by Rural Electrification Corporation Ltd. on 31st March, 2024. Compute the amount of chargeable capital gain and business income in the hands of Tani arising from the above transactions for Assessment Year 2024-25 indicating clearly the reasons for treatment for each item. Cost Inflation Index: FY 2011-12: 184; FY 2020-21: 301; FY 2023-24: 348. [CA Final May 2013] [10 Marks]

Direct Tax Laws & International Taxation (DT) | A.Y. 2024-25 |CRACKER AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO NO. OF PAGES BINDING TYPE

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