Section 47- Transactions not regarded as Transfer

Section 47 specifies certain transactions which will not be regarded as transfer for the purpose of capital gains tax:

1. Any distribution of capital assets on the total or partial partition of a HUF [Section 47(i)].
2. Any transfer of capital asset by a company to its subsidiary company, the following conditions should be satisfied [Section 47(iv)];
   • The parent company or its nominee must hold the whole of the shares of the subsidiary company;
   • The subsidiary company must be an Indian company
3. Any transfer of capital asset by a subsidiary company to the holding company, the following conditions should be satisfied [Section 47(v)];
   • The whole of shares of the subsidiary company must be held by the holding company;
   • The holding company must be an Indian company.
4. Any transfer, in a scheme of amalgamation, of a capital asset by the amalgamating company to the amalgamated company if the amalgamated company is an Indian company [Section 47(vi)].
5. Any transfer in a demerger, of a capital asset by the demerged company to the resulting company, if the resulting company is an Indian company [Section 47(vib)].
6. Any transfer or issue of shares by the resulting company, in a scheme of demerger to the shareholders of the demerged company, if the transfer is made in consideration of the demerger of the undertaking [Section 47(vid)].
7. Any transfer by a shareholder, in a scheme of amalgamation, of shares held by him in the amalgamating company [Section 47(vii)];
   • The transfer is made in consideration of the allotment to him of any share/s in the amalgamated company, except where the shareholder itself is the amalgamated company;
   • The amalgamated company is an Indian company.
8. Any transfer of a capital asset under a gift or will or an irrevocable trust [Section 47(iii)];
   • However, this clause shall not include 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 the Employees’ Stock Option Plan or Scheme offered to its employees in accordance with the guidelines issued in this behalf by the Central Government.