What should be the Cost of Acquisition for an asset transferred by a person,
who had acquired the asset on liquidation of a company?
Section 49(1) provides that it should be the Cost of previous owner
but section 46 provides it should be FMV of asset on the date it was distributed by the company
Plz help.
Dear Vedant Ji,
For this you have to understand both the section i.e. Section 49(1) Previous Owner & Section 46. I'm going to explain it in bit details:
Section - 49(1) It suggest that it Assessee has received assets on Liquidation of the Company then the COA in the hands of the Assessee shall be cost in the hands of Original buyer.
Section - 46 This Section discusses about the Capital Gains Calculation in case of Liquidation of the Company. Now understand both the Subsection of this section;
Section 46(1): This tells that when Company Liquidate and transfer assets to the Assessee then this would not be regarded as TRANSFER in the Hands of Company and hence No Capital Gains shall be charged in the hands of Company. BUT CO. HAS TO PAY CDT U/S 2(22)(C).
Section- 46(2)- This suggest when Assessee received assets against their shares in company then this would be deemed as transfer and this section tells How to Calculate Sale Consideration (of assessee share in company) in case of Liquidation. Here sale Consideration shall be-
Money Received from company
(+) Market Value of Assets Received from Company on Liquidation;
(-) Amount on which Company has paid CDT u/s 2(22)(C) [as mentioned above in 46(1)]
THE RESULTING AMOUNT SHALL BE THE SALE CONSIDERATION OF SHARE WHICH THE ASSESSEE WERE HOLDING IN COMPANY AND AGAINST WHICH THESE ASSETS WERE GIVEN TO ASSESSEE BY THE COMPANY.
COA of Assets which Assessee acquired on Liquidation of Co.:-
The COA shall be Calculated as per the same value which has been added u/s 46(2) i.e. Market Value of Assets on the date of Liquidation. Which means the COA shall prevail as per u/s 46(2) and not 49(1). The Period of Holding shall also be taken from date of Liquidation to date of transfer of Such Assets.
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