Capital Gain

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SHREYANSH B SHAH (Querist)
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21 May 2011 Hi Expert, Can u Please give me effect on following problem:

If one Private Limited Company transfer shares to another private Ltd Company which is Closely Held , What is the effect of this?
Whether it is taxable and where it is constructed as Long term and Shirt term Gain?

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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21 May 2011 The transfer of shares shall be subject to capital gain as the transfer seems to be off the market and there wont be STT paid on the same. In this case, for determining the nature of capital gain, whether short term or long term, the period of holding the shares shall be considered. If the shares are held for a period of more than 3 years, then it is long term, else, short term.

SHREYANSH B SHAH

SHREYANSH B SHAH (Querist)
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21 May 2011 In which section the period for Long term or Short term of Closely held company is prescribed?

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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21 May 2011 This is because, the shares are transferred are not of listed company where STT is paid. In such case, the basic term for long term and short term shall apply. Refer to Section 2(42A) of the Income Tax Act. It is very clear from that.

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