Yes friends, how are you all? Good morning, good afternoon,
good evening.
Whoever is watching me at this time, my heartfelt greetings
to that person.
How are you all? I am Shrey Gupta, your friend.
And your elder brother who is supporting you in the
discussion of this text.
How are you? How is the weather where you are? Is the
weather okay?
Is it not too hot? Is it not too cold?
Are you able to see me? Are you able to hear me? Come sir.
In the last lecture, in 2-3 lectures in fact, we were
discussing a new head of income on capital gains.
We saw that apart from your business, if you have some
other work, if you buy a property and sell it, if you make
any profit from it, then what happens? It becomes taxable
in capital gains.
For that, we saw what is a capital asset? It should be a
capital asset.
So we read the definition of capital asset.
We saw that jewellery was a part of the capital asset.
Yes, but rural agricultural land, your business stock,
etc., that was not a part of your capital asset.
Then we did a bifurcation that what is short term and what
is long term.
We discussed about that.
We read the section 45, the charging section.
Come, read it again.
What does this section 45 say?
It says that profit and gain arising from transfer of
capital asset affected in the previous year shall be
chargeable to income tax in the year in which transfer took
place.
The year you get transferred, it will become taxable in
your hands.
The year you get transferred, it will become taxable in
your hands.
So if you read this definition carefully, there were 2-3
things which I had discussed in 1-2 lectures earlier.
That profit and gain arising from transfer, transfer of
capital asset affected in the previous year shall be
chargeable to income tax in the year in which transfer took
place.
The year you get transferred, the year you sell your
property, it will become taxable in your hands.
If you read this definition carefully, there are 2-3 words
which are emphasized.
First is transfer, second is capital asset.
What is capital asset? We had discussed about it.
Now what is transfer?
Sir, what is transfer?
Transfer means if I sell an asset, it is transferred.
If I sell an asset, it is transferred.
Sir, selling an asset is not only called transfer.
In transfer, many other things also come.
Only selling an asset is not called transfer.
There are some other provisions for this.
If those provisions apply to you, then it will be assumed
that you have transferred your asset.
And once your capital asset is formed, and second time it
is transferred.
So what will happen? Capital asset is formed and
transferred.
So what will you get? Capital gain tax.
We have read the definition of capital asset.
Let us see what all comes in transfer and what not.
Come with me.
We will try to see what all comes in transfer and what not.
Come with me.
It is given in section 2, sub section 47.
Transfer in relation to capital asset includes sale,
exchange, relinquishment of the asset.
If you sell an asset, it is transferred.
You have exchanged the asset.
Exchange means if you had an old property or jewellery for
example.
If you had a jewellery of 1980.
You gave your jewellery of 1980 to a jeweller.
Or you sold it.
Or you bought a jewellery of 1985.
If you had any profit in this transaction, then it will be
assumed that it is your income.
Why will it be assumed?
Because first of all, jewellery is your capital asset.
Secondly, what is transfer?
Because it is an exchange.
If it is an exchange, then it is transfer.
Come with me.
Next.
Extinguishment of any rights.
If you had the right to live in a property.
If you were living on rent in a property.
If lease agreement was on your name.
You had a right.
And what did you do?
You sold that right to someone else.
You said that I have lease rights, tenancy rights of this
house.
I will give Rs.25,000 to my landlord every month.
This was your agreement.
But that property was so auspicious.
That 2-3 more people came there.
And told you to do one thing.
You have to give Rs.25,000 to your landlord.
You do one thing.
Give this property to us.
We will come to your place on rent.
We will keep giving Rs.25,000 to the landlord.
And because you are vacating this place.
We will give you Rs.5,00,000.
In one way, what did you do?
You had a right to live on rent in that house.
You extinguished that right.
Now what is this Rs.5,00,000 that you have received?
This will be considered as a transfer.
And your capital gains will be on it.
Third point.
Compulsory acquisition.
What is the meaning of compulsory acquisition?
Have you ever heard this word in Hindi language?
That my land has come under check bondage.
My land has come under check bondage.
What is the meaning of check bondage?
Do you all understand the meaning of bondage?
Do you understand bondage?
Check bondage means.
Come on seriously guys.
Listen carefully.
Check bondage basically means.
Your land was in such a place.
From where the government had to build a highway.
The government had to build a highway.
So what did the government say?
Their land is coming under check bondage.
Do one thing.
Buy their land.
And remove the road from there.
You had a good piece of land.
What did the government forcefully do to that land?
They seized it.
In that case, don't you have the right that you should get
some money for your land from the government?
Isn't it the duty of the government to give you some money?
In a way, if the government gives you money.
In a way, although it is not.
In a way, it is believed that you sold your land to the
government.
Will it be believed or not?
It was your land.
The government forcibly seized it.
They acquired it.
And in return, they gave you money.
In that case, it will not be believed that it was
transferred.
The money you got, take out your profit and loss on it.
And in the head of your capital gains, it will become
taxable.
The money you get from the check bondage, it will become
taxable on your capital gains.
I am sure, the people who are watching this video,
somewhere you must have heard this word.
Somewhere, it might have happened to you too.
In that case, whoever has experienced this, talk to your
relative.
Ask them, have you also deposited your capital gains?
For the check bondage.
Okay? Come to the fourth point.
Owner of capital assets may convert the same into stock and
trade of the business.
Such conversion is treated as transfer.
For example,
I am a jeweler.
And I am a jeweler.
So, what will be considered as my stock?
What is a jeweler's stock?
Jewelry, gold, silver.
This is called a jeweler's stock.
Suppose, I had a capital asset.
First tell me, does jewelry become a capital asset?
Yes or no?
First discuss this.
Does jewelry become a capital asset?
We have studied the definition of capital asset.
Open your notes.
We had studied the definition of capital asset.
In that, we had excluded 4-5 things.
After that, there was another point.
We are excluding these things, but we are including jewelry.
So, jewelry will be my capital asset.
If I sell jewelry and earn some profit,
I will have to pay income tax.
Jewelry is my capital asset.
Suppose, there is a jeweler.
His name is
Lappi Lahiri.
What is his name?
Lappi Lahiri.
Lappi Lahiri went to his mother-in-law's house and his
mother-in-law gifted him a jewelry worth 1 crore.
She gifted him a jewelry worth 1 crore.
Lappi Lahiri
His mother-in-law gifted him a jewellery worth 1 crore
He kept that jewellery safe in his house
It was a necklace worth 1 crore
And it was such a necklace that the police of 11 countries
were searching for it
The police of 11 countries were searching for that necklace
And there was a gangster behind it
That gangster was also looking for it
Where was the necklace?
In Lappi Lahiri's safe
He thought that when the police of 11 countries were
searching for it and a gangster was also behind it then why
not sell this necklace worth 1 crore for 15 crores
A house worth 14 crores will be profitable
So what did he do?
The capital asset which was locked in his safe and was of
no use which he got from his mother-in-law
He opened the safe's key and took out the jewellery and put
it on display in his showroom
He put it on display that even if the police of 11
countries come, I will sell it for 15 crores
And even if the gangster behind it comes, I will sell it
for 15 crores
What is happening in this case?
In the beginning, when he got the jewellery from his
mother-in-law then it was his capital asset
He had no intention
He had no intention to sell it
He is a jeweller
Although his job is to sell jewellery
But he got it as a personal thing
It was jewellery
It was personal
But the government was saying that personal jewellery is
also there
So he said, okay, consider it as a capital asset
I am locking it in the safe
I am not selling it
But as soon as he got the news that this jewellery is in
high demand he converted it as a stock
It was a capital asset
He converted it as a stock
Why did he convert it as a stock?
Because now he wants to sell it
He converted the capital asset into a stock
So this conversion will also be considered as a capital
asset
Taking out the jewellery from the safe of your house and
putting it on the display of your shop is also considered
as a transfer
We will discuss its taxability later
But it is a unique case
It is a unique case
Please understand this
My business is of something else
My business is of jewellery
I am getting this jewellery personally
I don't want to sell it
It is my capital asset
But if I convert it later then this conversion will also be
considered as a transfer
Please come
The fifth point
Maturity of Zero Coupon Bond
It is a zero coupon bond
It is a government bond of 5-10 years
You go to the market and get it redeemed after 10 years
After getting it redeemed the money you get will be
considered as your capital gains
It is a kind of transfer
The bonds have matured
When it matured you went to the counter and said
These were my bonds
Give me money in return
The money you get will be considered as income
It will be considered as a transfer
Part performance of the contract
These were some points
What did we learn from this?
We learned what is the meaning of transfer
Transfer means that you were getting the sale right
But there were 4-5 more things which were not 4-5 things
like converting the capital asset
This is transfer
I got my right extinguished That is also a kind of transfer
These few things come under the definition of transfer
Why am I reading this?
Why am I talking about transfer?
Sir, why are you talking about transfer?
Will someone tell me?
Why are you discussing about transfer?
Sir, we are discussing because
Section 45
Section 45 means the charging section which is given by the
Income Tax Act to this section that you will impose tax on
capital gains
It says that
Capital asset will be transferred in the same year when the
Income Tax will be imposed
Capital asset will be transferred
We have already discussed what is capital asset
What is transfer?
We have already seen that
If in these 5-6 things
I don't fall under the definition of transfer even if it is
a capital asset but I don't fall under the definition of
transfer and I get some money from it even if I get some
money from it even that will not be taxed on capital gains
That is why you have to remember two things in this chapter
1.
Is it a capital asset? 2.
Does it fall under the definition of transfer?
If it is, then whenever you sell it whichever year you sell
it it will be taxed on
However, there are some exceptions to this
In some cases, when you sell it in a different year it will
be taxed in a different year
We will discuss this later
For now, understand this
What is the definition of transfer?
Did you understand the point?
Did you understand?
Come with me
Now, let's discuss what is transfer?
Now, let's discuss what does not fall under the definition
of transfer
What is transfer? and what does not fall under the
definition of transfer?
Now, let's discuss
My laptop is a little lagging today
That is why I am taking some time
Otherwise, my notes would have been open by now
Sir, which laptop are you using? Son, what can I tell you?
This is a laptop from the time of Baba Azam
Come with me
Transaction is not regarded as transfer
I just told you that if you transfer a capital asset it
will be taxed on
But what does this mean?
If you have a capital asset
and if you don't transfer it in these transactions you get
covered in these transactions
So, it can be assumed that there is no transfer
And if there is no transfer, then no income tax will be
imposed on it
No income tax will be imposed on it
This is the point
Sir, if there is a capital asset and if it is covered in
these transactions then there is no income tax
No capital gains tax
Sir, then quickly tell me which capital assets are there
that even if I transfer them here and there no income tax
will be imposed on me
Come with me
Do you have an HUF?
HUF is distributed
Distribution is very painful
It hurts everyone
Distributors as well as buyers
Although, while taking it you will definitely benefit from
the money
But that emotional burden you will never be able to forget
for the rest of your life that it was distributed and I
took the last deposit from my parents
I have never been in favour of distribution
Nor do I advise you to do it
Never do it
You will be separated for the rest of your life
You will be like a branch of a tree that moves separately
No matter where you are, no one will care
Real happiness is not money
Real happiness is the support of your family
Government is motivating you to do wrong things
Don't do it by mistake
Come with me
Do you have a partial partition of the HUF?
Do you have a distribution of the capital asset?
HUF is Hindu Undivided Family
The name itself is Undivided
And from Undivided you are removing Undivided
You are dividing the family
In that division, suppose you get a capital asset, a
jewellery
Your wife gets a jewellery
You get a property from somewhere
So, what you have to get
What you have to get
This is called transfer
The things you are getting like jewellery land a factory
papers an office
Giving Giving is not called transfer
When there is no transfer
Even though it is a capital asset
But there is no transfer
And when there is no transfer, there will be no tax
Yes, but the person who is getting it is such a bad person
that he has divided the structure of the Hindu Undivided
Family
So, we will definitely put tax on him
When that person will sell it
Then tax will be imposed on him
Because then it will be covered in the definition of
transfer
Remember, the first point of transfer is sale
It will be covered there
It will be considered as transfer
But when he is receiving it
Then there is no transfer
Come to the second point
A gift will or an irrevocable trust
If, for example, a person is inspired by your work
For example, when we used to have classes, I am telling you
an actual example
There was a student, he had a share market job
He wanted to make his career in this line
So he took our classes
It is a matter of chance that he liked the classes so much
that he got a good job
And when he got a job
So he called me and said, sir, whatever I make today
should I make it because of you, sir?
I said, no, son, there is no such thing as because of me
This is your own hard work
All the students take classes from us
But it is your hard work that you saw the entire classes
You took advantage of it
He said, no, sir, I felt your teaching style was like this
I didn't feel like I was teaching a teacher
I felt like a friend was teaching me
I said, okay, this is your greatness, my brother
Otherwise, we teach everyone
So he said, no, sir, I have a share market job
And I want to gift you 5000 shares of Reliance Company
I said, 5000 shares of Reliance Company?
Whereas, at that time, the share of Reliance was 2500
rupees per share
5000 shares means 1.25 crore rupees
Although I refused this, I said no, I don't want it
Some students say, sir, let's take it No, I don't want all
these things
I am not doing this to earn money
My objective is different
I want this education to reach as many people as possible
Because no one knows all these things You will study in
college, you will study in school
No one knows these things
No one at this level will know So I refused
In a way, that boy was giving me a gift
What was I getting in the gift? I was getting shares of the
company
I was getting shares of the company So what I am getting as
a gift
This will not be considered as a transfer
If someone gives a gift to a person
In the hands of the giver, it will not be considered as a
transfer
In the hands of the giver, nothing will be taxable
Yes, the one who is getting it If he sells it
If I was getting shares of 1.25 crore
And later, if I sold it for 1.25 crore
Then what would I get in my hands?
I would get capital gains
This is the real story
I never lie
All the examples I give are related to my real life
I swear to you
I have not given a single false example in my class
You know, if it was false, it would have come on my face
It has come on my face
Next The gift is done, the will is done
Do you understand the meaning of the will?
You get someone's property
There is no tax on the property But when you sell it in the
future
You will be taxed
Sir, this is a very important point In real life, a lot of
people come
If you get someone's property
Sir, you are talking about sharing
I am not talking about sharing
If a third person is giving you his property
And without any loss
He is so impressed with you
He says, after my death
My 1,000 crore property is yours
Bobby Deol got it
There will be a discussion in the next chapter
Bobby Deol is a hero
He stole his father-in-law's heart
Father-in-law was so inspired by Bobby Deol
That he gave his 300 crore property
To his son-in-law Bobby Deol
He got it as a will
When he died
He got the will for 300 crore
Will father-in-law's hands be taxable on getting it?
Neither will father-in-law's hands be taxable
Nor will Bobby Deol's hands be taxable
But when Bobby sells it
Then Bobby Deol's hands will be taxed
Because At that time it will be considered as a transfer
Remember the first point
Sale He is selling his property
In this case, it is being received
And it is also being said that
If you get a gift and a will, it is not considered as a
transfer
It is a capital asset
But if there is no transfer
Where will the capital income tax come from?
Who has the guts
To impose capital income tax on me?
Transfer of capital asset by the holding company
To the wholly owned Indian subsidiary company
For example, there is a holding company
What is a holding company and a subsidiary?
It is a reliance company
Reliance Industries Limited
And till the time
Jio was not 100% independent
Reliance had
Reliance Jio's 100% shares
What I want to say to you I want to say
Reliance Industries
RIL It had Jio's 100% shares 100% shares were Jio's
Now suppose
Reliance Industries gives it a capital asset Some land
Some office property That I have to open a separate office
for Jio
It will be spent unnecessarily
I have an empty office
Why not transfer Jio's company
To this office? It is a capital asset
It is an office building
It is a capital asset
Now what am I doing?
I am transferring it
To a company where
I have a 100% share
What will happen in that case?
Should it be considered a transfer?
In that case, the government says
You will not consider it a transfer
But the condition is
The parent company
RIL RIL It must hold the whole of the shares
It should have 100% shares
Not 99%
Reliance should have 100% shares
And the subsidiary company
It should be an Indian company
This is called
Holding company
And this is called
Subsidiary Subsidiary Subsidiary company
Holding company
Holding the subsidiary company
If I have 100% shares
Of the subsidiary company
And I transfer an asset to my subsidiary
Then any transfer
Will not be considered
But in the future
If Jio sells that office building
In the market
Will it be considered a transfer?
Yes, it will be taxable
But when it is receiving
At that time
It will not be taxable
The next point is
If the subsidiary gives something
To its holding company
Today's position is
If Jio is removed from Reliance
Reliance will be in trouble
Jio has so much hold in the market
In today's time
Is Jio capable
To give any asset to Reliance
Any capital asset
Any building
Is it capable?
In that case
If it was the same office building
Which Reliance transferred to Jio
So that your employees
Can sit and work
So you take this building from us
Today Jio has become such a big brand
That it is giving the same office building
To Reliance Industries
So in that case
It will not be considered a transfer
The condition is
The one who is being transferred
Should hold 100% shares
It should be an Indian company
Should hold 100% shares
This is the point.
In this case
It is not considered a transfer
The one who is leaving
If he sells it
Then we will consider it as a transfer
In that case
You will get
Capital gain
These are some points
These are some of your points
The rest are not as important as the practical aspects
That's why I am not covering them
The rest are in your notes
You can see them there
These are the points
The ones that are covered
Are these
I have covered them
Okay sir
I will wind up today's lecture here
Otherwise it will be too long
It will be heavy for you as well
It is heavy for me as well
I have a passion to teach
I can do this all day
It feels good to meet you
I would like to say one thing
Everyone has talent
There is no one in this world
Who does not have talent
Everyone has talent
But some people work so hard
And some people
Leave that talent
Someone's example
Is published
And someone's talent
Is hidden
Everyone has talent
But Someone's is hidden
And someone's talent is published
You have to recognize that talent
Work in that direction
Success will kiss your feet
First test your talent
Work on that
You will definitely
Be successful
Success is not a big deal
Those who have been successful
They don't do something different
They do the existing work
In a different way
There is nothing else
Many teachers teach
But I try to
Have a new and interesting style
To talk to you
That's all. It's my job to boost in between. You are my
younger brother and sister.
I will keep explaining till you agree.
What did we learn in today's lecture?
In today's lecture we learned that what is considered as a
transfer?
Sale, rights extinguished, capital asset converted by Mr.
Lappi Lahiri in stock is considered as a transfer.
And then we learned that what is called as a transfer is
not considered as a transfer.
You got the distribution done, you got the will money, you
got a gift.
In those cases, there is a transfer in the relationship of
holding subsidiary.
In those cases, that transfer is not considered as a
transfer.
That's all for today. Thank you very much, friends.