The Company purchases gold coins and gifts its to Employees. The Company pays FBT on it and claims it as an expenditure in the Profit and Loss Account.
When the Employee sells the gold coins what would be considered as the cost of Acquisition? Would it be Cost to previous owner u/s 49(1) or would it be zero as the Company has already claimed it as an expenditure?
In Myopinion, as it is received under gify, the cost of acquisition of previous owner will be treated as cost of employee.
Vijay
The cost of acquisition will be treated as NIL, while the employee is assessed for capital gains tax on its transfer
| Originally posted by :M.Sriram Shenoy | ||
| " | The cost of acquisition will be treated as NIL, while the employee is assessed for capital gains tax on its transfer | " |
i agree with Mr. Sriram
Dear Sir/Madam
Section 49.
[(1)] Where the capital asset became the property of the assessee—
(i) on any distribution of assets on the total or partial partition of a Hindu undivided family;
(ii) under a gift or will;
(iii)----------------------------(iv)
the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be.
Refering to Section 49
[(2AA) Where the capital gain arises from the transfer of the shares, debentures or warrants, the value of which has been taken into account while computing the value of perquisite under clause (2) of section 17, the cost of acquisition of such shares, debentures or warrants shall be the value under that clause.]
[(2AB) Where the capital gain arises from the transfer of specified security or sweat equity shares, the cost of acquisition of such security or shares shall be the fair market value which has been taken into account while computing the value of fringe benefits under clause (ba) of sub-section (1) of section 115WC.]
In view of above, we can conclude that cost of the Gold coin will be the cost to previous owner i.e. cost to employer or alternatively the value chargeble to the value on which FBT is paid and not as Nil.
Regards
Dear all
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balaji.K
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