Income Tax - Consistency in taxability of income/loss arising from transfer of unlisted shares - CBDT clarification
BOARD feels that for determining the tax-treatment of income arising from transfer of unlisted shares for which no formal market exists for trading, a need has been felt to have a consistent view in assessments pertaining to such income.
It has, accordingly, been decided that the income arising from transfer of unlisted shares would be considered under the head 'Capital Gain', irrespective of period of holding, with a view to avoid disputes/litigation and to maintain uniform approach.
However this decision will not be applicable to the situations where:
i. the genuineness of transactions in unlisted shares itself is questionable; or
ii. the transfer of unlisted shares is related to an issue pertaining to lifting of corporate veil; or
iii. the transfer of unlisted shares is made along with the control and management of underlying business
CBDT Letter in F.No.225/12/2016/ITA.II., Dated: May 02, 2016