India: Transfer of shares held as stock-in-trade pursuant to amalgamation results in taxable business income (Supreme Court decision)
General tax-free treatment for transfers of shares pursuant to amalgamation does not apply.
The Supreme Court held that the taxpayer’s transfer of shares, held by the taxpayer as stock-in-trade, pursuant to an amalgamation gives rise to taxable business income when the shares received in the exchange are freely tradeable and capable of certain valuation.
The court found that the general rule under which a transfer of shares held as a capital asset pursuant to an amalgamation is treated as a tax-free exchange, did not apply.
The case is: Nalwa Investment Limited v. CIT
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