mutual Transfer of capital asset- will it attract C.G.TAX

Tax queries 966 views 5 replies

karthikeyan.v

Chartered Accountant

523 Points Joined August 2009

Dear friends

1. Transfer includes sale- A sale may be defined as a contract founded on money consideration by which the absolute or general property in the subject of sale is transfered from the sellet to buyer.

2. the essentials of a sale are

(1) Mutual agreement

(2) Competent parties

(3) A Money consideration

(4) A Transfer of absolute or general property from seller to buyer

if any of these is missing then ther is no sale

now my question is when there is mutual transfer of assets between two persons, the value is fixed but no money is exchanged, will capital gain tax get attracted

karthi

Replies (5)

S.Harish

Student

28 Points Joined February 2008

There is no capital gain tax in the case of mutual exchange of capital asset. But if the capital asset which is received by the transferee as a consideration is sold with in a period of 3 years. Then the capital gain tax is attracted

Chintan Shah

534 Points Joined October 2009

Mutual transfer falls within the meaning of transfer under Income tax act, since its exchange which is specifically included in the definition of transfer. So such mutual transfers will be taxable even if no money is exchanged...

Max Payne

employed

2574 Points Joined May 2008

I Agree with Chinthan,

exchange is also a form of transfer...

The term "transfer" is also interpreted according to the provisions of TP Act... Some court decisions are there that the definition of transfer is only inclusive, and the general meaning is to be understood relying on the TP Act.

"Sale" is not the only form of transfer... :)