Amendment of section 47

Section 14 of the Finance Act, 2015 deals with amendment of section 47. Amendment of section 47. 14. In section 47 of the Income-tax Act, with effect from the 1st day of April, 2016,— (a) | after clause (viaa), the following clause shall be inserted, namely:— "(viab) | any transfer, in a scheme of amalgamation, of a capital asset, being a share of a foreign company, ref

Amendment of section 47.

14. In section 47 of the Income-tax Act, with effect from the 1st day of April, 2016,—

(a)

after clause (viaa), the following clause shall be inserted, namely:—

"(viab)

any transfer, in a scheme of amalgamation, of a capital asset, being a share of a foreign company, referred to in Explanation 5 to clause (i) of sub-section (1) of section 9, which derives, directly or indirectly, its value substantially from the share or shares of an Indian company, held by the amalgamating foreign company to the amalgamated foreign company, if—

(A)		at least twenty-five per cent of the shareholders of the amalgamating foreign company continue to remain shareholders of the amalgamated foreign company; and
(B)		such transfer does not attract tax on capital gains in the country in which the amalgamating company is incorporated;";

(b)

after clause (vicb), the following clause shall be inserted, namely:—

"(vicc)

any transfer in a demerger, of a capital asset, being a share of a foreign company, referred to in Explanation 5 to clause (i) of sub-section (1) of section 9, which derives, directly or indirectly, its value substantially from the share or shares of an Indian company, held by the demerged foreign company to the resul-ting foreign company, if,—

(a)		the shareholders, holding not less than three-fourths in value of the shares of the demerged foreign company, continue to remain shareholders of the resulting foreign company; and
(b)		such transfer does not attract tax on capital gains in the country in which the demerged foreign company is incorporated:
		Provided that the provisions of sections 391 to 394 of the Companies Act, 1956 (1 of 1956) shall not apply in case of demergers referred to in this clause;";

(c)

after clause (xvii), the following clause shall be inserted, namely:—

'(xviii)		any transfer by a unit holder of a capital asset, being a unit or units, held by him in the consolidating scheme of a mutual fund, made in consideration of the allotment to him of a capital asset, being a unit or units, in the consolidated scheme of the mutual fund:
		Provided that the consolidation is of two or more schemes of equity oriented fund or of two or more schemes of a fund other than equity oriented fund.
		Explanation.— For the purposes of this clause,—

(a)		"consolidated scheme" means the scheme with which the consolidating scheme merges or which is formed as a result of such merger;
(b)		"consolidating scheme" means the scheme of a mutual fund which merges under the process of consolidation of the schemes of mutual fund in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(c)		"equity oriented fund" shall have the meaning assigned to it in clause (38)of section 10;
(d)		"mutual fund" means a mutual fund specified under clause (23D)of section 10.'.

Section 14, The Finance Act, 2015 (Act 20 of 2015).