Securities Act 2063

Chapter 8 Assessment of Net Profit from Property and Liability

Section 45 : Transfer between associated persons and other non-market transfers
1) If any person disposes of any property by transferring it to an associated person or any other person for no consideration, the following provisions shall apply:-
a) The person who has disposed of the property shall be deemed to have received the amount equal to the market value of that property at the time of disposal for the disposal, and
b) The person who has acquired the property through disposal shall be deemed to have incurred cost in a sum equal to clause (a).
Provided that this provision shall not be applicable where the provision of Sections 43 and 44 applies.
c) In case of the property transferred pursuant to sub-clause (5) of clause (r) of Section 2, the costs incurred by the person transferring such property shall be deemed to be the costs incurred by the person acquiring such property.
2) Notwithstanding anything contained in sub-section (1), if any person disposes of any business assets, non-business taxable assets or property remaining as stock-in-trade by transferring ownership over such property to any associated person and the matters contained in sub-section (6) are fulfilled, the following provisions shall apply:-
a) That person shall be deemed to have received the amount equal to the net loss suffered for that property immediately before the disposal, for the disposal, and
b) The person who has acquired the property through transfer shall be deemed to have incurred cost in a sum equal to that mentioned in clause (a).
3) Notwithstanding anything contained in sub-section (1), if any person disposes of any depreciable property by transferring ownership over such property to any associated person by fulfilling the matters contained in sub-section (6), the following provisions shall apply:-
a) That person shall be deemed to have received, for the disposal, the amount equal to the remaining value of the group of the descending system pursuant to Section 4 of Schedule II at the time of disposal and
b) The person who has acquired the property through transfer shall be deemed to have incurred cost in a sum equal to that mentioned in clause (a).
4) If any person disposes any liability by transferring it to an associated person pursuant to this Section or by transferring it to any other person without giving any value, the following provisions shall apply:-
a) The person shall be deemed to have incurred cost for the disposal in a sum equal to the market value or the net income earned for the liability immediately before the disposal, whichever is lower, and
b) The transferee of the liability shall be deemed to have received an amount equal to that liability in respect of the assumption of the liability.
Provided that this provision shall not be applicable where the provisions of Sections 43 and 44 apply.
5) If any person disposes of any liability assumed in earning income from any of his business by transferring it to an associated person, by fulfilling the matters mentioned in sub-section (6), the following provisions shall apply:-
a) The person shall be deemed to have incurred cost for the disposal in a sum equal to the net income earned for the liability immediately before the disposal and
b) The associated person shall be deemed to have received an amount equal to that amount in respect of the assumption of the liability.
6) For purposes of sub-sections (2), (3) and (5), the following matters have to be fulfilled:-
a) The disposed business property, stock-in-trade or depreciable property of business shall be the business property, stock-in-trade or depreciable property of business of the associated person immediately after the transfer by the person making such disposal.
b) The disposed business property, stock-in-trade or depreciable property of business shall be the business property, stock-in-trade or depreciable property of business of the associated person immediately after the transfer by the person making such disposal.
c) In the case of any liability, the liability has to be transferred to the associated person for the earning of income from any business or investment of the associated person.
d) The transferor and the associated person shall have to be residents at the time of transfer, and the associated person has not to be a person enjoying tax exemption.
e) The ownership vested in that property or burden vested in that liability shall continue to exist fifty percent as the case may be.
f) Both that person and the associated person have to make a request in writing in order to enforce an option under sub-sections (2), (3) or (5), as the case may be.