Big Query Solved section 46 (Income Tax)--- Classic Query

Here is my favorite query :

According to section 46(1) "Distribution of Assets in kind by a company to its Shareholders at the time of liquidation" is not "TAXABLE TRANSFER"

Under section 49(1) "on any distribution of assets on the liquidation of a company" the cost to previous owner is deemed to be cost of acquisition to the assessee.

While one section states it is not a taxable transfer but other tells its cost of acquisition. This question was asked by one of the PCC students by numerous CA Final Students and he got answer from none.

Well the actual interpretation of these sections can be judged only by practical situation.

In the words of law I had interpreted that section 49(1) is applicable only and only when the company distributes assets other than to its shareholders. This interpretation was accepted by all unanimously.

Thanks all....