Income Tax Act, 2025
Section 3: Ins. by Act 12 of 1990, s. 15 (w.e.f. 11991).
3. Ins. by Act 12 of 1990, s. 15 (w.e.f. 11991).
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46. Capital gains on distribution of assets by companies in liquidation.—(1) Notwithstanding
anything contained in section, where the assets of a company are distributed to its shareholders on its
liquidation, such distribution shall not be regarded as a transfer by the company for the purposes
of section 45.
(2) Where a shareholder on the liquidation of a company receives any money or other assets from the
company, he shall be chargeable to income-tax under the head “Capital gains”, in respect of the money so
received or the market value of the other assets on the date of distribution, as reduced by the amount
assessed as dividend within the meaning of sub-clause (c) of clause (22) of section 2 and the sum so
arrived at shall be deemed to be the full value of the consideration for the purposes of section 48.
1[46A. Capital gains on purchase by company of its own shares or other specified securities.—
Where a shareholder or a holder of other specified securities receives any consideration from any
company for purchase of its own shares or other specified securities held by such shareholder or holder of
other specified securities, then, subject to the provisions of section 48, the difference between the cost of
acquisition and the value of consideration received by the shareholder or the holder of other specified
securities, as the case may be, shall be deemed to be the capital gains arising to such shareholder or the
holder of other specified securities, as the case may be, in the year in which such shares or other specified
securities were purchased by the company.
Explanation.—For the purposes of this section, “specified securities” shall have the meaning assigned
to it in Explanation to section 77A of the Companies Act, 1956 (1 of 1956).]
47. Transactions not regarded as transfer.—Nothing contained in section 45 shall apply to the
following transfers:—
(i) any distribution of capital assets on the total or partial partition of a Hindu undivided family;
2* * * * *
(iii) any transfer of a capital asset under a gift or will or an irrevocable trust :
3[Provided that this clause shall not apply to transfer under a gift or an irrevocable trust of a
capital asset being shares, debentures or warrants allotted by a company directly or indirectly to its
employees under 4[any Employees’ Stock Option Plan or Scheme of the company offered to such
employees in accordance with the guidelines issued by the Central Government in this behalf];]
(iv) any transfer of a capital asset by a company to its subsidiary company, if—
(a) the parent company or its nominees hold the whole of the share capital of the subsidiary
company, and
(b) the subsidiary company is an Indian company;
5[(v) any transfer of a capital asset by a subsidiary company to the holding company, if—
(a) the whole of the share capital of the subsidiary company is held by the holding company,
and
(b) the holding company is an Indian company:]
Notwithstanding
anything contained in section, where the assets of a company are distributed to its shareholders on its
liquidation, such distribution shall not be regarded as a transfer by the company for the purposes
of section 45.
Where a shareholder on the liquidation of a company receives any money or other assets from the
company, he shall be chargeable to income-tax under the head “Capital gains”, in respect of the money so
received or the market value of the other assets on the date of distribution, as reduced by the amount
assessed as dividend within the meaning of sub-clause
of clause
of section 2 and the sum so
arrived at shall be deemed to be the full value of the consideration for the purposes of section 48.
1[46A. Capital gains on purchase by company of its own shares or other specified securities.—
Where a shareholder or a holder of other specified securities receives any consideration from any
company for purchase of its own shares or other specified securities held by such shareholder or holder of
other specified securities, then, subject to the provisions of section 48, the difference between the cost of
acquisition and the value of consideration received by the shareholder or the holder of other specified
securities, as the case may be, shall be deemed to be the capital gains arising to such shareholder or the
holder of other specified securities, as the case may be, in the year in which such shares or other specified
securities were purchased by the company.
Explanation.—For the purposes of this section, “specified securities” shall have the meaning assigned
to it in Explanation to section 77A of the Companies Act, 1956 (1 of 1956).]
47. Transactions not regarded as transfer.—Nothing contained in section 45 shall apply to the
following transfers:—
any distribution of capital assets on the total or partial partition of a Hindu undivided family;
2* * * * *
any transfer of a capital asset under a gift or will or an irrevocable trust :
3[Provided that this clause shall not apply to transfer under a gift or an irrevocable trust of a
capital asset being shares, debentures or warrants allotted by a company directly or indirectly to its
employees under 4[any Employees’ Stock Option Plan or Scheme of the company offered to such
employees in accordance with the guidelines issued by the Central Government in this behalf];]
any transfer of a capital asset by a company to its subsidiary company, if—
the parent company or its nominees hold the whole of the share capital of the subsidiary
company, and
the subsidiary company is an Indian company;
5[
any transfer of a capital asset by a subsidiary company to the holding company, if—
the whole of the share capital of the subsidiary company is held by the holding company,
and
the holding company is an Indian company:]