Jeet Biswas (ACMA (in Service)) (5073 Points)
24 January 2010Sec 47A is attracted if the Transferee Co. converts the asset into Stock in Trade OR
If the Holding Co. ceases to hold 100% share cap in the Subsidiary.
Can it be interpreted that Sec. 47A is not attracted, if the Asset is sold by the Transferee Co. (as a capital asset i.e without converting it into Stock in trade) ?
CA.G.Muguntha Narayanan
(Internal Auditor at TVS Motors)
(2195 Points)
Replied 25 January 2010
when the asset is sold, CG gets attracted.
Jeet Biswas
(ACMA (in Service))
(5073 Points)
Replied 25 January 2010
Am asking abt a different issue here...i.e only abt Sec. 47A
Sunil Liladhar Kotak
(Manager (F & A))
(2025 Points)
Replied 25 January 2010
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dear, u seem right as the above mentioned clause is not there on the 47A -(i.e. selling without convering the same to stock in trade) & therefore the same shall not attract the section 47A Extract of 47A(is mentioned below) Section 47A WITHDRAWAL OF EXEMPTION IN CERTAIN CASES. (1) Where at any time before the expiry of a period of eight years from the date of the transfer of a capital asset referred to in clause (iv) or, as the case may be, clause (v) of section 47, - (i) Such capital asset is converted by the transferee company into, or is treated by it as, stock-in-trade of its business; or (ii) The parent company or its nominees or, as the case may be, the holding company ceases or cease to hold the whole of the share capital of the subsidiary company, the amount of profits or gains arising from the transfer of such capital asset not charged under section 45 by virtue of the provisions contained in clause (iv) or, as the case may be, clause (v) of section 47 shall, notwithstanding anything contained in the said clauses, be deemed to be income chargeable under the head "Capital gains" of the previous year in which such transfer took place. |
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 25 January 2010
| Originally posted by : ●๋• J€€T | ||
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Sec 47A is attracted if the Transferee Co. converts the asset into Stock in Trade OR If the Holding Co. ceases to hold 100% share cap in the Subsidiary. Can it be interpreted that Sec. 47A is not attracted, if the Asset is sold by the Transferee Co. (as a capital asset i.e without converting it into Stock in trade) ? |
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Please anybody explain the query more as it is not clear to me
Thnaks
varun sharma
( CA Final , M.Com)
(87 Points)
Replied 25 January 2010
hello jeet,,
this is some clarification to ur query , i hope it will help to some extent..
According to sec 47 A (1) the exemption given, transfer bya holding co to its wholly subsidiary co or vice versa willl be withdrawn or u can say sec 47 A does not attract in the following circumstances :
1. where at any time before the expiry of a period of 8 yrs from the date of transfer of the capital asset by a holding co to its wholly owned sub co or vice versa, such a capital asset is converted by the transfree co in to, or is treated by it as , stock in trade of its business ; or
2. The parent co or its nominees or as the case may be the holding co, ceases to hold the whole of the share capital of the subsidiary co before the expiry of a period of 8 years from the date of transfer of capital asset..
so with regard to ur queries if obove two situations which is mentioned by u, occurs with 8 years from the date of transfer of capital asset then sec 47 A does not atttract... this is as per my view. if any one has their own view , then pls enlithen the sitution,...... ok
varun sharma
( CA Final , M.Com)
(87 Points)
Replied 25 January 2010
one more thing if sec 47 A does not attract , that means there will be capital gain arises in hands of transfror co and it is chargeble in the previous year in which transfer ot such asset to transfree co had taken place.. In this case , as per sec 155 (7B) , the assessment of the transfror co will be rectified under sec 154 with in 4 years and 4 year will be recon from the end of the previous year in which the capital asset was converted in stock in trade or in which holding co ceases to hold whole of the share capital of its subisdiary company...
CA PALLAVI VOHRA
(Learner)
(140 Points)
Replied 25 January 2010
Hi Jeet, U r correct ,in this case Section 47A will not be applicable.So we can say the transferor will not be treated to have generated capital gains and no reassessment. But there is capital gain/loss in the hands of transferee of asset.But here it is to be shown that the sale is not an ordinary course of business i. e the transferee has not treated it as stock in trade.
Rohan
(Student - Article)
(30 Points)
Replied 25 January 2010
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