Amendment to Section 2(42A) w.e.f. Assessment Year 2019-2020 under Income Tax Act.
The following amendments have been made to the scheme of section 2(42A) with effect from the assessment year 2019-20 —
Section 2(42A), inter alia, provides for determination of period for which the capital asset is held by the assessee (in order to ascertain whether the capital asset Is Long-Term Capital Asset or Short-Term Capital Asset). A new sub-clause (ba) has been inserted in Explanation 1(i) so as to provide that in case inventory is converted into or treated as a capital asset, the period of holding shall be reckoned from the date of its conversion or the treatment.
Provisions illustrated - X is a dealer in shares. He purchases 1,000 equity shares in A Ltd. as inventory on January 10, 2018. These shares are listed in Bombay Stock Exchange. These shares are converted into capital asset on May 2, 2018. The capital asset is transferred on March 15, 2019. It is transfer of short-term capital asset (period of holding : from May 2, 2018 to March 15, 2019).
For the purpose of section 2(42A), “equity oriented mutual fund” will have the same meaning assigned to it in section 112A
All efforts are made to keep the content of this site correct and up-to-date. But, this site does not make any claim regarding the information provided on its pages as correct and up-to-date. The contents of this site cannot be treated or interpreted as a statement of law. In case, any loss or damage is caused to any person due to his/her treating or interpreting the contents of this site or any part thereof as correct, complete and up-to-date statement of law out of ignorance or otherwise, this site will not be liable in any manner whatsoever for such loss or damage.
The visitors may click here to visit the web site of Income Tax Department for resolving their doubts or for clarifications