LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

Dividend stripping sec 94(7)

attika (Article assistant) (179 Points)

23 July 2016

What is the income in sec 94(7)Means income includes both dividend as well as profit if earned on sale. With that loss only to the extent of difference with dividend is c/f for set off means - If loss is 500000 Dividend income is 10000I can c/f 490000 as STCL. PLS EXPLAIN

Reply
Follow
Share

2 Replies

CA Saurabh Singh (Practising Chartered ) (974 Points)
Replied 23 July 2016

Hello Naina,

U/s 94(7), dividend stripping the compltet provion states that :

any person buys or acquires any securities or unit within a period of three months prior to the record date;

such person sells or transfers—

(i) such "securities" within a period of three months after such date; or

(ii) such "unit" within a period of nine months after such date;]

then, the loss, if any, arising to him on account of such purchase and sale of securities or unit, to the extent such loss does not exceed the amount of dividend or income received or receivable on such securities or unit, shall be ignored for the purposes of computing his income chargeable to tax.]

Hence you are right that if such situation happens then the amount of loss to be carried forward shall be Rs.4,90,000 ignoring the dividend of Rs. 10,000