Point of taxation and on whom the liability arises??

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 November 2011 1.X & Co revalues its land in its books.
2.X & Co as per Companies Act, under the scheme of arrangement, transfers the property to Y after approval from High Court.
3.In this case. Y will pay to shareholders of X & Co the value as agreed in the Court in CASH.

Concerns: What will be the tax liability in X & Co, as this will be case of pure transfer.

What will be the tax liability in the hands of Shareholders of X? Will it be treated as dividend?

Any Case Law to support your answer??

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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26 November 2011 Transfer of asset by an amalgamating company to an amalgamated company is exempt under Section 47.

Transfer of shares by shareholders of amalgamating company is exempt ONLY IF THE CONSIDERATION IS RECEIVED BY WAY OF SHARES.

If the consideration is received in cash, the transfer will be taxable in the hands of the shareholders under Capital Gains.

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