Chargeability of Capital gains on shares allotted to partner in complaince with the Seciton 47 (xii) of the Inocme tax Act,1961.

[Venkateswararao Sunkara]

Date on which period of holding and year of indexation should be computed in respect of Sale of shares by the partner (presently share holder) allotted for compliance ofsection 47(xiii) of the Income Tax Act, 1961. if sale takes place in 2010 by considering the following example. 1. Constitution of Partnership firm - 1972 2. Converted into company in the year-1998 and all the partners became the share holders of the Company. 3. Sale of shares one of the Partner (allotted u/s 47(xiii) in the year - 2010 Kindly explain the Capital gain implications in the hands of the Share Holder(Partner) as well as the company if any.

AI Summary

Clarifying Capital Gains on Shares: Section 47(xiii) and Indexation Rules for Shares Sold in 2010. A discussion on the chargeability of capital gains on shares allotted to a partner under Section 47(xiii) of the Income Tax Act, 1961, addresses the computation of the holding period and indexation year for shares sold in 2010. The partnership was formed in 1972 and converted into a company in 1998, with partners becoming shareholders. One response states that indexation should start from 1998 and no capital gain arises for the company. Another emphasizes considering the allotment date and value, and advises checking the lock-in period conditions under Section 47(xiii)(d) before transferring shares.