according to sec 46(1), it is said that it is not taxaxble in the hands of the company because it is not a taxable transfer.
but in sec 46(2), it is given that it is taxable in the hands of the shareholders.[ consideration received less deemed dividend u/s 2(22)(c), cost of acquisition = cap gains.]
my query is, when are the provisions of sec 46(2) ATTRACTED.
Minal
46 is applicable if following conditions are satisfied :
1. Assets are distributed by a company
2. Assets are distributed at the time of Liquidation
3. Assets are distributed to shareholders
Such distribution is not taxable in ahnds of Company since not considered TRANSFER
Howerever in case of shareholder as per sec 46(2), The market value of assets received by shareholder on liquidation minus Amt of deemed dividend u/s 2(22)(c) shall be treated as sale consideration......
We are reducing deemed divinded to compute sale considrn coz company has already paid tax on de same....
CAclubindia
