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Section 47 – Income Tax Act, 1961

Income Tax Act, 1961

 

Section 47. TRANSACTIONS NOT REGARDED AS TRANSFER.

 

Nothing contained in section 45 shall apply to the following transfers : (i) Any distribution of capital assets on the total or partial partition of a Hindu undivided family;

 

(iii) Any transfer of a capital asset under a gift or will or an irrevocable trust;

 

(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 amalgamating 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;

 

(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) At least seventy-five per cent of the shareholders 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; 

 

(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 capital asset, being bonds or shares 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 753 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 bonds or debentures, debenture-stock or deposit certificates in any form, of a company into shares or debentures of that company.

 

(xi) Any transfer made on or before the 753ca 31st day of December, 1998, 753ca by a person (not being a company) of a capital asset being membership of a recognised stock exchange to a company in exchange for 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 Contract (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) Where a firm is succeeded by a company in the business carried on by it as a result of which the firm sells or otherwise transfers any capital asset or intangible asset to the company

:

Provided that – (a) All the assets and liabilities of the firm 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 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 share holding continues to be as such for a period of five years from the date of the succession;

 

(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 so 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), in this regard.

 

 

Related Judgements

 

COMMISSIONER OF INCOME-TAX v. J. K. INDUSTRIES LTD

 

 

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Income Tax Act, 1961 

 

Indian Laws – Bare Acts

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