Section 45 of the Income Tax Act-Capital Gains

Section 45

Section 45(1) of the Income Tax Act

Any profits or gains deriving from the transfer of a capital asset effected in the previous year shall; save as otherwise provided in section 54, 54B, 54D, 54EA, 54EB, 54E, 54F, 54G and 54H; be chargeable to income tax under the head “Capital Gains”; shall be assumed to be the income of the PY in which the transfer took place.Section 45

Section 45 of the Income Tax Act-Capital Gains

Section 45(1A) of the Income Tax Act

Notwithstanding anything included in sub-section (1); where any person acquires at any time during any PY any money or other assets from an insurer under an insurance on account of destruction of, or damage to any capital asset, as a result of;

  1. Flood, typhoon, cyclone, hurricane, earthquake or another convulsion of nature; or
  2. Riot or civil disturbance; or
  3. Accidental fire or explosion; or
  4. Action by the enemy or action taken in opposing an enemy (whether without or with a declaration of war).

then, any profits/gains arising from receipt of such money or other assets is chargeable to income-tax under head “Capital gains”; and will be deemed to be the income of such person of the PY in which such money or other asset was obtained and; for the purposes of section 48, value of money or the fair m.v. (market value) of other assets on the date of such receipt will be deemed to be the full value of the consideration received or accruing due to the transfer of such capital asset.

Explanation: For the purposes of this subsection; the expression ‘insurer‘ shall have the meaning specified to it in section 2 clause (9) of the Insurance Act, 1938 (4 of 1938).

Section 45(2) of the Income Tax Act

Notwithstanding anything included in sub-section (1); the profits or gains resulting from the transfer by conversion by the owner of a capital asset into, or its treatment as stock-in-trade of a business carried on by him; is chargeable to income-tax as his income of the PY in which he sells or transfer such stock-in-trade; and for the purposes of section 48, the fair m.v. (market value)of the asset on the date of such treatment or conversion is deemed to be the full value of the consideration earned or accruing due to the transfer of the capital asset.

Section 45(2A) of the Income Tax Act

Where a person has had at any time during PY any beneficial interest in securities; then, any profits/gains resulting from transfer made by the depository or participant of such beneficial interest in regard of securities; is chargeable to income-tax as the income of the beneficial owner of the PY in which; such transfer took place and shall not be deemed as income of the depository which is considered as the registered owner of securities; by virtue of section 10(1) of the Depositories Act, 1996, and for the purposes of;

  1. Section 48; and
  2. Provision to clause (42A) of section 2.

The cost of acquisition & the period of holding of any securities shall be determined on the basis of the first-in-first-out method.

Explanation: For the purposes of this subsection; the expressions ‘beneficial owner‘, ‘depository‘ and ‘security‘ shall have the meanings respectively attributed to them in clause (a), (e) and (l) of sub-section 91) of section 2 of the Depositories Act, 1996.

Section 45(3) of the Income Tax Act

The profits or gains resulting from the transfer of a capital asset by a person; to other association of persons or a firm or body of individuals (neither being a company nor a co-operative society) in which; he/she is or becomes a partner or member, by the contribution of capital or otherwise; shall be chargeable to tax as his income of the PY in which such transfer takes place and; for the purposes of section 48; the amount written in the books of account of the association, firm or body as the value of the capital asset; shall be deemed to be the full amount of the consideration earned or accruing from the transfer of the capital asset.

Section 45(4) of the Income Tax Act

The profits/gains deriving from the transfer of a capital asset by distribution of capital assets; on the firm’s dissolution or other association of persons or body of individuals (neither being a company; nor a co-operative society) or otherwise; shall be chargeable to tax as the income of the association, firm or body, of the PY in which the said transfer takes place and; for the purposes of section 48; the fair m.v. (market value) of the asset on the date of such transfer; is deemed to be the full value of the consideration received or accruing from the transfer.

 

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