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