section 46(2)
Avya Agrawal (67 Points)
21 November 2017
can anyone explain the section with refernce to2(22)(c)
Avya Agrawal (67 Points)
21 November 2017
Tarun Kumar Madaan
(Practitioner)
(4660 Points)
Replied 21 November 2017
When you receive money or other assets on the liquidation of company same is taxable as income under the head capital gain as per section 46(2) since it will be regarded as transfer.
However, Section 2(22)(C) also considers it as deemed dividend. Thus, only remaining portion will be taxable under the head capital gains.
Sale consideration will be calculated as below:
Money Received
Add: Market Value of Assets Received
Less: Amount treated as deemed dividend as per section 2(22)(C)
Balance will be sale consideration for the shares of liquidating company
Avya Agrawal
(67 Points)
Replied 22 November 2017
Tarun Kumar Madaan
(Practitioner)
(4660 Points)
Replied 22 November 2017
Suppose you have received Rs. 10,000 Cash and other assets having market value Rs. 10,000/- at the time of liquidation of company against your shares. Assuming Cost of acquisition of your shares are NIL.
Let’s say deemed dividend u/s 2(22)(C) is Rs. 5,000/-. Now Sale Consideration for the purpose of computing income taxable under Capital Gain will be as below:
|
Money Received |
10,000 |
|
|
Add: |
Market Value of Assets Received |
10,000 |
|
Less: |
Amount treated as deemed dividend u/s 2(22)(C) |
5,000 |
|
Sale Consideration for the Purpose of Computing Capital Gain |
15,000 |
CAclubindia
