Capital gains on unusual assets transfer- solve with Best Ca in Udaipur

“Insured property destroyed by calamity? Capital gains tax in tricky situations explained by a tax advisor in Udaipur- for unusual asset transfers – including destroyed insured property, capital to trading conversion, securities depository transfer, personal to firm property.

Calculation of capital gain on destruction of insured property [Section 45 (1A)]

If insured Property destroyed by flood, storm, earthquake or other natural calamity, fire or explosive, riot or civil commotion or action taken by the enemy or in action to combat the enemy, Then the amount received from the insurance company or any other person is considered as the full value of the consideration of the destroyed property and capital gain is calculated on the value of consideration received.

Capital gains on transfer of personal property by partner to the firm [Section 45(3)]

If a partner or a member of an association of persons transfers any property to the partnership firm or to the association of persons, then the price at which the property is entered in the accounts of partnership firm will be considered as full value of consideration of the property transferred in to the firm, and the capital gain will be calculated on that basis.

If the partner transfers any asset which does not fall in the category of capital asset, then the provisions of section 45 (3) will not apply.

Calculation of capital gain on transfer of property on dissolution of the firm [Section 45(4)]

In such situation it will be taxable in the hands of the firm or association of persons but if the transferred asset does not fall in the category of capital asset under section 2(14), then capital gain will not be calculated.

The fair market value of the transferred assets on the date of transfer will be considered full consideration. Short term capital gain is determined on the basis of block of increase on depreciable asset.

Calculation of capital gains on compulsory acquisition of property Section [45(5)]

If the acquisition of capital asset:-

• is on account of compulsory under any law or
• If the consideration is compulsory determined by the Reserve bank of India or  approved by the Central Government (not a State Government)

In the above circumstances, capital gain will be calculated in the previous year in which the transfer takes place but it will be taxable in the previous year in which the first installment of consideration is received.

Once the amount is determined,

1. Thereafter, if the compensation amount is increased by the court, the entire increased amount would be taxable as capital gain as the cost of acquisition of the asset is considered to be nil.
2.  However, if any expenses incurred on litigation, then this expenses will be deducted from the capital gain. .
3. If any person other than the transferor receives the amount, it will be taxable in the hands of recipient.

Calculation of capital gain on repurchase of units under Section 80CCB [Section 45(6)]

Under Section 80CCB, on repurchase of units invested, the repurchase price will be considered as taxable by deducting the price obtained by applying index cost on the amount invested in the units.

 Long Term Capital Gain = (Repurchase Price – Index Cost of Units Appointed). It is important to note there  here that the original amount which was invested under section 80ccb will be taxable under the head Income from other sources.

Udaipur tax expert or capital gain tax consultants in Udaipur  unravels capital gains tax calculations for unusual asset transfers – including destroyed insured property, capital to trading conversion, securities depository transfer, personal to firm property.