SPECIAL CASES of TRANSFER

Securities held SLUMP Transfer between Maturity of

in DEMAT formm SALE Firm & Partner ULIP

→ Transfer of Securities held in Demat form

The Cost of Acquisition and Period of Holding will be determined on FIFO Basis

→ Maturity of ULIP [Unit linked Insurance Plan] - Sec 45(1B) → Explained later
not exempt us 10(10D)

Any Amount received by any person under ULIP issued on or after 01.02.2021

Shall be taxable as capital Gains Income if

premium paid> Rs. 2,50000 Aggregate premium paid by a person for

for any year more than one policy > Rs. 2,50,000

SLUMP SALE [Sec. 50B]

Slump Sale means Sale of Undertaking/Unit/division for Lump Sum Consideration.

If unit/ undertaking is held for more than 3 years

Long term capital Gain will arise

Otherwise short term
→ Indexation not allowed in Slump sale

Full Value of Consideration Cost of Acquisition

FMV 1 a Net worth of Unit Transferred

or FMV 2 w.e. is higher

3.11
 Full value of consideration
Jo Assts ki value
FMV 1
n nahi badhti - Book value.
or w.e. is higher Jo Assets kii value

FMV 2 Badhti hai- FMV/SDV/OMV

Liabilities - Book value
↳ same as exit tax
FMV 1 = A + B + C + D - L

A = Book Value Of All Assets Except Jwellery, artistic work- B

(-) [TDS/Advance Tax Less Refund] Some Shares & Securities - C
(-) Un-amortized deffered expenditure Assets Immovable property - D

B = Open Market Value of Jwellery, Artistic work.

C = FMV of shares & securities
D = SDV of Immovable properties
L=Book value of all the liabilities shall be taken Excluding:
→ Any provision of Income Tax
→ Paid up capital
→ any contingent liability other than arrears of dividend on cumulative pref. shares
→ any unascertained liability
→ any reserve or surplus
→ any provision for dividend which were not declared before date of transfer

FMV 2 = E + F + G + H
E = Amount received from Transfer Jo paise mile for transfer
+ Jo Assets mile
F = FMV of shares & securities received
unki - FMV/SDV/OMV
G = SDV of Immovable property Received
H = Open Market Value of Other Assets received
→ for all the above assets, Valuation date is date of slump sale.

Cost of Acquisition = Net worth of the Undertaking (as per Income Tax Act)

Total Value of Assets Transferred Depreciable Assets = WDV

(-) Book Value of liabilities Sec 35 AD Assets =Nil
Net worth of Unit Self generated goodwill= Nil
Other Assets = Book value
Note: For Revalued Assets, Remove the effect of Revaluation i.e. take the original value without revaluation.

3.12
 TRANSFER BETWEEN FIRM & PARTNER

as a capital contribution
Cap Asset
Partner/member Firm/AOP/BOI → Sec 45(3)

Taxable in the hands of partner

FVOC= Amount credited in Partner/Member's Capital A/c

Cap Asset
Cap Asset
Firm/AOP/BOI Partner/Member or SIT
SIT
Sec 9B → Dissolution or
Taxable in the hands of firm Reconstitution

Sec 45(4) → Reconstitution

↳ only cap Asset.

Note: In case of Reconstitution, both sections are applicable section 9B & 45(4)

Sec 9B:- Capital Asset/Stock in trade distributed on Dissolution or

Reconstitution of firm
Where a partner receives on Dissolution/Reconstitution

Capital Asset Stock in Trade

Taxability in the Capital Gains PGBP

hands of firm : Taxable in the Taxable in the
year in which year in which
partner, member partner, member
receives Cap Assets. receives Such Stock

FVOC/Value at which → FMV on the date of receipt by partner

it is Taxable

Sec 45(4): Capital Gain on Transfer of capital Asset by Firm/AOP/BOI to Partner

on Reconstitution
If Capital Asset distributed on To Partners
Reconstitution
then Capital Gains will be taxable in the hands of Firm.

3.13
 Computation of capital gain → A = B+C-D
B = Value of any money received by partner/member from Firm/AOP/BOI
C= FMV of Capital Assets Received by partner/member
D= Partner/member's Capital A/c Balance at the time of Reconstitution.

If A=negative, then CG=O Capital A/c Balance will not include

any value increased due to
Cap Gain will always Self Generated Goodwill
be taken as STCG Depreciable Asset Revaluation Self-generated
case of 3 Assets Other STCA of any Asset goodwill or any
Other Asset.

Rule 8AB:. Capital Gain is bifurcated into LTCG & STCG in the ratio of → change in
value of remaining Assets.
i.e. increase in value due to Fmv.
BV FMV Increase due to FMV
eg: Land 50 100 50
Self Gen. Goodwill 0 80 80

LTCG = Cap Gain x 50 STCG= Cap Gain x 80

130 130
Dissolution
Calculate Cap Gain u/s 9B A → This Capital Gain is attributed
to remaining Assets
Reconstitution
Calculate CG u/s 9B LTCG & STCG are calculated in
the ratio of increase in value due to FMV
We Calculate Book profit (less tax)
While selling the remaining Assets, this
Divide it between partners already attributed LTCG & STCG
is deducted from FVOC of Asset.
Calculate Partner's capital-D

Then Calculate CG u/s 45(4)

A= B+C-D
Capital Gain
3.14
 Taxation of ULIP

Before on or after
1.2.21 1.2. 21
Conditions to check Premium →upto premium → upto 2,50,000
for Exemption: 10%/15%/20% premium → upto 10%/15% of sum
of sum assured assured

In Case of Single ULIP issued on or after 1.2.21:

If Premium Paid on such policy is upto 2,50,000, then the maturity is exempt u/s 10(10D).
If Premium Paid on such policy is > 2,50,000, then the maturity is taxable.

In Case if Multiple ULIPs issued on or after 1.2.21:

The ULIPs in respect of which aggregate Premium is upto 2,50,000, those ULIPs'
Maturity will be exempt u/s 10(10D).
Other ULIPs maturity will be taxable.

In Case of Death of Insured, Maturity will be Exempt u/s Sec 10(10D)

Sec 45(1B):
Where any person receives any amount under ULIP which is not exempt u/s 10(10D),
then any profit or gain arising from such amount shall be taxable as Capital Gain

Rule 8AD:
A-B is taxable as Capital Gain
A= Any Amount from Policy Received Jo Paisa mila - Jo
B= Premium Paid till Now paisa Diya

C-D

C= Balance Maturity Amount Received Jo Baad me Paisa Mila-

D= Premium paid on this amount Jo Extra Premium Diya

Iska Example YK sir class me or YT

3.15 pe karwa denge, don't worry
 Class Notes Examples

Case Scenario 1
Mr. Manoj (aged 45 years) is a resident Indian who has the following life insurance policies, some
of which are ULIPs. The details of such policies are given hereunder:
wi not Both
Particulars Anot B
11 C (ULIP) D (ULIP) E (ULIP) F (ULIP)
Date of issue 1.4.2015 1.4.2016 1.2.2021 1.1.2021 1.3.2021 1.4.2021
Annual
premium
Date when
50,000

1st April
40,000

1st April
1,00,000

1st Feb
3,00,000

1st Jan
1,40,000

1st March
2,50,000

1st April
É
premium falls
due every year
Date of maturity 31.3.2023 31.3.2023 31.1.2030 31.12.2029 28.2.2030 31.3.2030
Consideration 7,00,000 4,00,000 11,00,000 32,00,000 17,00,000 28,00,000
received on 1700,000 28,00000
maturity 4.00.000 11100,000
17.60.000 22.50.000
(including 2,601000
1 440.000 5.50.000
bonus)
Sum assured
19 1
6,00,000
1,20ooo
3,50,000 10,00,000 30,00,000 15,00,000 25,00,000
Hot35000
During the P.Y.2022-23, Mr. Manoj has earned dividend income of 12 lakh from shares of Indian
companies and long-term capital gains (computed) of 5 lakhs on sale of land. He deposited
1,50,000 in National Pension Scheme (Tier-I account) of Government. Mr. Manoj does not opt for
section 115BAC.

1210lb Dividend

FEE
stalls land Less
1,501000
NPI 8011
considered as Equityoriented Fema
No a Uup
is
CLIP parable lot inexcess of lwow union shortterm
at
ULIN Parable Under Ca LIP Parable underIPOs
101151201 Deduction Un Soc is allowedonly uptothisamount
UUP issued before 112121 parable under Ipos
as it is not a capital Asset

While computing 101151201 s we take 107151207

q sum Assured
While computing ca un 4517671 we fake Maturityproceeds
C Prem paid tin wow

3.23
 On the basis of the facts given above, choose the most appropriate answer to Q.1 to Q.5below,
based on the provisions of the Income-tax Act, 1961 -
1. Which are the life insurance policies (excluding ULIPs) in respect of which Mr. Manoj would
be eligible for exemption under section 10(10D) in respect of maturity proceeds and what
is the quantum of deduction which would be available under section 80C in respect of
premium paid on such policies for A.Y.2023-24? Assume that Mr. Manoj does not have any
ULIPs only for the purpose of answering this MCQ.
(a) A and B; 90,000
(b) A and B; 85,000
(c) Only A; 50,000
(d) Only A; 85,000 501000 35000 85000
2. Which are the ULIPs in respect of which Mr. Manoj would be eligible for exemption under section
10(10D) in respect of maturity proceeds? Choose the option most beneficial to Mr. Manoj.

(a) Only C and E

(b) Only F
(c) Only C, D and E
(d) Only D and F
3. Considering the option chosen in MCQ 2 above, what would be the capital gains
computed under section 45(1B) in the hands of Mr. Manoj for A.Y.2030-31? Assume that,
for the purpose of this MCQ, no consideration was received prior to the maturity date in
case of any ULIP.
(a) 11,40,000
(b) 10,50,000
(c) 5,50,000
(d) 6,40,000
4. What is Mr. tax liability for A.Y.2023-24?
Dividend 1200,000
(a) 2,21,000
2,36,600
land 49 50,000
(b) 1,201000
LIP Mahesh
(c) 2,58,440
I 18,201000
DeanGoc
801 LIP pm 1,501000
150

16.20.000
80480KDID
80CCC 11w.no
500,000 148500
1,50 ooo x so 1ooooo

2.49.500 47con

258440

3.24
 (d) 2,74,040
5. What would be the total tax deductible under section 194DA during the P.Y.2022 -23 on
payment of maturity proceeds of life insurance policies to Mr. Manoj?
(a) 3,500
For LIP B
(b) 6,000
20,000
400,000
(c)
(d) 55,000
2180,000
1120,000

TDS us 194pA I 20,000 51

6000

3.25
 Case Scenario 1 Reconstitution

Mr. Prem is a partner in two firms X & Co., Mumbai and Y & Co., Delhi. X & Co. has four
partners, including Prem, who share profits and losses equally. Mr. Prem resigned from X & Co.
on 1.4.2022. On the said date, the capital balance of each of the partners stood at 32 lakhs.
In order to settle the dues of Mr. Prem, the firm revalues its land for the first time since purchase;
the valuer also valued self-generated goodwill at 70 lakhs. The firm has the following capital Hee
assets, whose details are as follows. I
Reconstitute
Particulars of Assets Date of Cost of Value as on 1.4.2022 as
purchase acquisition per Valuation Report GB 459
(book value) (Rule 11U)
1. Land at Pune 21.1.2013 15 lakhs 50 lakhs 35 lack
2. Land at Nagpur 18.4.2015 25.4 lakhs 45 lakhs
3. Land at Mumbai 14.5.2013 88 lakhs 250 lakhs 162lakh
4. Self-generated goodwill 70 lakhs gym
In April, 2022, X & Co. gave Land at Nagpur and 15 lakh money to Mr. Prem to settle his capital 267
balance.
91
The firm Y & Co. dissolved on 1.3.2023 and distributed its land at Chandigarh, Mohali and
Gurgaon on the same date to its three partners, Prem, Akshay and Aarav, respectively, who were Yew
sharing profits and losses equally. The particulars of these lands are given hereunder
Particulars of Assets Date of
purchase
Cost of
acquisition
Value as per
Valuation Report
disgust
(book value) as on 1.3.2023
(Rule 11U)
1. Land at Chandigarh (given to Prem) 3.7.2011 18.4 lakhs 62 lakhs 184 33133.1
2. Land at Mohali (given to Akshay) 15.9.2015 15.24 lakhs 59 lakhs 1531 321 19.86
3. Land at Gurgaon (given to Aarav) 27.2.2011 16.7 lakhs 70 lakhs 33.1
x321
191 86.06

Froe 191
WA 0
9 4 ISB
yea

3.26
© The Institute of Chartered Accountants of India
 2 FINAL EXAMINATION: MAY, 2022

In addition, Prem and Akshay were given money of 8 lakhs and 11 lakhs, respectively on
1st March, 2023.
Cost Inflation Index is as follows: F.Y.2010-11 167; F.Y.2011-12 184; F.Y.2012-13 200;
F.Y.2013-14 220; F.Y.2014-15 240; F.Y.2015-16 254 and F.Y.2022-23 331.

Solution Tae 011 SB

XIA Yao
Froe 45 lakh thoo 191
CoA
33.1 tales IWA 86.06
34 331
11.9 lath 419 109.94
I
TCG

Taz247520
I 24 44,683
GI vis112
207 Eh

XU 45147

A B 15100,000
45.00.000
q
4281207
D 36,281120 32100,000
23.71.880 capgainyea secasy

Prem ko 66 CalebRupeespayable the

45100,000

25,401060

1960,000 Fayda Bookprofit

2 47,520 capGani SB
1712,480 purifirm no fayda
hua hai
4
4,28120 a distributed to all
4 partners
3.27
© The Institute of Chartered Accountants of India
 23,74880 35 162 70

ii
t longtermcap9am
Land at Mumbai 23,4880 19,3g
agg
6 21,841 shortTermcap Gans

Ysold at the Mumbai thengoodman

futuredate Assumed yo 280 90
Roc 3 10,94 14,39118 6.21.841
Froe and
Icon are retreatFoc 66,89079 2,656,0892 83.79.159
assumed
ILA 4010,000 1,2000,000 0
Tramples
CAgumed 26,89075 145,601882 81.79.155

Indesation Rebate Wh
u
see 112 Allowed v
Leaf see 112A X Notallowedx
see 111A itwed
stay Normal x g

3.28