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Capital gain

Bhusan Lunawat (Chartered Accountant) (19 Points)

10 May 2007

If a member of HUF transfers his self acquired property to HUF , whether this transfer is considered as transfer u/s 47 and chargable as capital gain ?

Further at the time of partition if such property is divided between all members equally and subsequently such property is sold by individual members , what will be the cost of acquisition and date to be considered for determining short term or long term capital gain ?

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1 Replies

Rajesh Bajaj (433 Points)
Replied 10 May 2007

Dear friend

If a member of HUF transfers his self acquired property to HUF , the income derived from OR the CAPITAL GAIN arising on transfer of the converted property will be chargeable to tax in the hands of the individual who has converted the said property.

Where the [b]Previous Owner [/b]also acquired the property by way of a transaction referred to in clauses (i) to (v) of Section 47 , then the cost of acquisition of the asset shall be the cost to the [b]Last Of The Previous Owner [/b]who acquired it by mode other than the modes referred to in clauses (i) to (v) of section 47

Where the HUF which received the property on conversion, is partitioned, the Cost of acquisition' in the hands of the [b]member[/b] receiving it on partition will be the amount for which the property was acquired by the member, who converted the said property into HUF property

in such cases the period for which the capital asset was held by the previos owner should be included in the period held by the assessee But the indexation is allowed to the assessee only for the period assessee held on to the assets