Preference share conversion into equity shares is not treated as transfer, with holding period carried forward for capital gains purposes.

Conversion of preference shares of a company into equity shares of the same company is treated as a transaction not regarded as a transfer for capital gains purposes. The cost in the hands of the transferee is linked to the relevant part of the cost of the preference shares, and the period of holding of the equity shares includes the period for which the preference shares were held by the assessee.

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