Indian Income-Tax Act, 1922

44E. Avoidance of tax by certain transactions in securities.-(1) Where the owner of any securities (in this sub-section and in sub-section (2) referred to as "the owner") agrees to sell or transfer those securities, and by the same or any collateral agreement-

(a) agrees to buy back or reacquire the securities, or

(b) acquires an option, which he subsequently exercises, to buy back or I reacquire the securities,

then, if the result of the transaction is that any interest becoming payable in respect I of the securities is receivable otherwise than by the owner, the interest payable as I aforesaid shall, whether it would or would not have been chargeable to tax apart from the provisions of this section, be deemed for all the purposes of this Act to be the income of the owner and not to be the income of any other person.

(2) The references in sub-section (1) to buying back or reacquiring the securities shall be deemed to include references to buying or acquiring similar securities, so, however, that where similar securities are bought or acquired, the owner shall be under no greater liability to tax than he would have been under if the original securities had been bought back or reacquired.

(3) Where any person carrying on a business which consists wholly or partly in dealing in securities agrees to buy or acquire any securities, and by the same or any collateral agreement—

(a) agrees to sell back or retransfer the securities, or

(b) acquires an option, which he subsequently exercises, to sell back or retransfer the securities,

then, if the result of the transaction is that any interest becoming payable in respect of the securities is receivable by him, no account shall be taken of the transaction in computing for any of the purposes of this Act the profits arising from or loss sustained in the business.

(4) Sub-section (3) shall have effect, subject to any necessary modifications, as i .... To read the full section download the app from Google Play store