One transaction, every provision - from classification through to a filed advisory-note conclusion.
Stage 0 / 6
Engagement brief
Your assignment
Kavita Shah, a resident individual, has asked your firm to compute the capital-gains position on a sale of unlisted equity shares in Meridian Textiles Pvt Ltd, completed this Tax Year. She wants a filed position, not a preliminary estimate - work through the file as you would for a real client, flagging anything you cannot yet confirm.
Asset
2,00,000 unlisted equity shares, Meridian Textiles Pvt Ltd
How acquired
Received as a gift from her father on June 1, 2019 (he had originally purchased them for ₹18,00,000 on March 1, 2017)
Sale details
Sold on August 15, 2026 for ₹42,00,000 cash to an unrelated buyer
Independent valuation
A registered valuer's Rule 57 report puts fair market value at ₹47,00,000 as at the sale date
Reinvestment
₹15,00,000 of the proceeds used to purchase a residential flat on October 1, 2026
Other position
A brought-forward long-term capital loss of ₹3,00,000 from Tax Year 2024-25 (a listed-share sale), fully within its 8-year carry-forward window
Documents on file
Gift deed dated June 1, 2019
Father's original purchase contract note, March 1, 2017
Sale agreement dated August 15, 2026
Registered valuer's Rule 57 report
Flat purchase agreement, October 1, 2026
Missing: prior-year assessment order evidencing the ₹3,00,000 carried-forward loss was correctly determined under a return filed on time
1Classify and fix the holding period
Is this a capital asset, has a transfer occurred, and what is the holding period?
Unlisted shares received by gift, then sold. What holding period governs the short-term/long-term test, and from what date does it run?
2Fix cost of acquisition and full value of consideration
Whose cost do you use, and is the sale price or the valuer's figure the FVC?
Cost of acquisition (drag to confirm)₹18,00,000
Since the shares were acquired by gift, Sec. 73's previous-owner rule applies: cost of acquisition is deemed to be the cost to the previous owner (the father) - ₹18,00,000 - not nil, and not stepped up to fair value on the gift date.
Sale price is ₹42,00,000; an independent Rule 57 valuation puts FMV at ₹47,00,000. Which figure is the full value of consideration?
3Compute the gain and identify the rate section
With FVC = ₹47,00,000 and cost = ₹18,00,000 (no indexation - shares are not eligible for the Sec. 197(1) indexation route on these facts), what is the long-term capital gain, and which rate section applies?
4Apply the reinvestment exemption
₹15,00,000 of the proceeds went into a residential flat on October 1, 2026 - within the window. What is the exempt amount under Sec. 86?
5Apply the brought-forward loss and escalate the documentation gap
A ₹3,00,000 LTCL is brought forward from Tax Year 2024-25. Can it be set off against this year's LTCG, and what should you do about the missing assessment-order evidence?
6Finalise the advisory note
Select the correct entry for each line of the advisory note before it goes to the reviewer.
Charging provision and Tax Year
Full value of consideration and cost of acquisition
Gain, exemption and net chargeable amount
Set-off, rate and escalation
✓
Capstone complete
This transaction required six modules working together: classification and holding period (Modules 1–3), cost/FVC substitution (Module 5), reinvestment exemption (Module 7), rate and surcharge (Module 8), and set-off/carry-forward (Module 9) - that integration, not any single provision, is what a real client file demands.
The unresolved assumption (missing assessment-order evidence for the brought-forward loss) should always be documented and escalated, not silently assumed away, even where the computation is otherwise straightforward.
Where the client is a non-resident, this same fact pattern would also require a DTAA analysis - covered in the separate international tax course.
Exact law · Income-tax Act, 2025, Sec. 73(1) (Table extract - gift)
Section 73 - cost with reference to certain modes of acquisition
"73. (1) Where the capital asset became the property of the assessee in any of the modes specified in column B of the Table below, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the asset incurred or borne by the previous owner or the assessee, as the case may be. TABLE - Sl. No. 1: modes include distribution on total or partial partition of a HUF, under a gift or will, by succession, inheritance or devolution, on distribution of assets on liquidation of a company, or on any transfer referred to in section 70(1)(a) to (w)."
Cross-check the section number and wording against the Income-tax Act, 2025 before relying on this extract in professional work. The full Table has 24 entries - only the gift-relevant row is shown here; see the Module 5 job aid for the complete table.
Exact law · Income-tax Act, 2025, Sec. 79(1)–(3)
Section 79 - FMV deemed consideration for unquoted shares
"79. (1) If the consideration received or accruing from the transfer of a capital asset, being share of a company other than a quoted share, is less than the fair market value of such share determined in the manner as may be prescribed, the value so determined shall be deemed to be the full value of consideration received or accruing as a result of such transfer for the purposes of section 72.
(2) The provisions of sub-section (1) shall not apply to any consideration received or accruing as a result of transfer by such class of persons and subject to such conditions, as may be prescribed.
(3) For the purposes of this section, the expression "quoted share" means the share quoted on any recognised stock exchange with regularity from time to time, where the quotation of such share is based on current transaction made in the ordinary course of business."
Cross-check the section number and wording against the Income-tax Act, 2025 before relying on this extract in professional work.
Exact law · Income-tax Act, 2025, Sec. 86(1)
Section 86 - investment in residential house
"86. (1) If an individual or a Hindu undivided family has-
(a) capital gains arising from the transfer of any long-term capital asset, not being a residential house (original asset); and
(b) within one year before, or two years after, the date of such transfer, purchased, or has within three years after that date constructed, one residential house in India (new asset),
then, the capital gains shall be dealt with as follows:-
(i) if the net consideration is more than the cost of the new asset, so much of the capital gains as bears to the whole of the capital gains, the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 67; or
(ii) if the net consideration is equal to or less than the cost of the new asset, no capital gains shall be charged under section 67."
Cross-check the section number and wording against the Income-tax Act, 2025 before relying on this extract in professional work.