Family arrangement is not regarded as transfer. For income tax purposes, a bona fide arrangement is not regarded as a transfer even when some assets change hands in consequence of such family arrangement. Where members are interested in firms and companies, consequently shuffling of interest is also a necessary incident of such family arrangement.

Moreover, where the family members decided to settle a possible dispute by a family arrangement involving an exchange of shares as between the family members, such exchange would not attract capital gains tax. As firms and companies are not members, shuffling of interest therein falls outside the scope of family arrangement. Such shuffling of interest in firms and companies in consequence of a family arrangement between members of the family, should not attract liability.

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