In case an asset is transferred from a parent company to a subsidiary company or from subsidiary company to a parent company [Section 47 (iv) or (v)} and
(a) Such capital asset is converted by the transferee company into or is treated by it as stock- in-trade before the expiry of a period of 8 years from the date of transfer, or
(b) The parent company or its nominees cease to hold the 100% of share capital of subsidiary company before the expiry of a period of 8 years from the date of transfer, the capital gain which was exempted u/s 47 will become taxable as deemed capital gain of the year in which such transfer took place.
(c) In case there is breach of any of the conditions prescribed for exemption of capital gain on succession of a firm or a sole proprietary concern u/s 47(xiii) and (xiv), the amount of gain arising from such transfer shall be deemed to be the gain taxable in the hands of successor company in the previous year in which such breach of condition takes place. [Section 47A(3)1
(d) With effect from assessment year 1998-99 the transferor who has transferred its membership of a recognised stock exchange and has received shares as consideration, such shares cannot be transferred for a period of three years from the date of transfer of membership, the amount of exemption claimed under section 47 shall be deemed as income chargeable to tax under the head capital gains. [Section 47A(2)].
Transfer in case of reverse mortgage [Sec. 47(xa)]
The Finance Act 2008 has inserted a new clause 47 (xa) in Income-Tax Act to provide that any transfer of capital asset in a transaction of reverse mortgage shall not be regarded as transfer and hence shall not attract capital gains tax.
It is further provided that loan received either in lump sum or in installments is a capital receipt and shall be exempted u/s 10.
A borrower, under the reverse mortgage scheme will be liable to income tax (i.e. tax on capital grains) only at the point of alienation of the mortgaged property by the mortgagee for the purposes of recovering of loan.