Can Penalty be levied on Dividend stripping transaction
This query is : Resolved
CA Mayur Sojrani
(Querist)
07 December 2010
Can penalty under section 271 (1)( c ) in case of Dividend Stripping Transaction done by the person be levied
08 December 2010
As per sec 94(7):
"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"
AO cannot impose penalty on the said transaction, only loss for A'sse is that he will not be able to claim benefit of set off of losses to the extent of dividend income.
"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"
AO cannot impose penalty on the said transaction, only loss for A'sse is that he will not be able to claim benefit of set off of losses to the extent of dividend income.
CA Mayur Sojrani
(Querist)
08 December 2010
but my friend is their any reason why penalty should not be levied on 94(7) transaction..
Is their any judgement in favour of this case. if plz refer me .
thanking for reply.
Mayur
Is their any judgement in favour of this case. if plz refer me .
thanking for reply.
Mayur
08 December 2010
Dear Mayur
The basic condition to impose penalty is that there should be presence of mens rea. Here income tax act is specifically mentioning in section about the treatment of loss if any accruing from the said transaction.
Further to above there is no restriction on period for holding of securities and the price at which the securities should be sold. You also refer sec 94(1), (2) & (3). there it is specifically mentioned for the same, but nothing is specified in regarding to sec 94(7).
The basic condition to impose penalty is that there should be presence of mens rea. Here income tax act is specifically mentioning in section about the treatment of loss if any accruing from the said transaction.
Further to above there is no restriction on period for holding of securities and the price at which the securities should be sold. You also refer sec 94(1), (2) & (3). there it is specifically mentioned for the same, but nothing is specified in regarding to sec 94(7).
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