Capital gain
This query is : Resolved
20 November 2012
M/S B acquired the shares of A Ltd in the year 2007-08. M/s B also held Shares of M/s C in the same year. SubsequentlyM/s A was merged with M/s C in the year 2009-10.
M/s B wants to sale the entire shareholding in M/s C in the year 2013-13.
The Shares of M/s C are listed on stock exchange but not traded. Hence the transaction will be off market.
Query : Whether M/s B will be entitled to index cost of acquisition on the shareholding of M/s A which was merged with M/s C.
M/s B wants to sale the entire shareholding in M/s C in the year 2013-13.
The Shares of M/s C are listed on stock exchange but not traded. Hence the transaction will be off market.
Query : Whether M/s B will be entitled to index cost of acquisition on the shareholding of M/s A which was merged with M/s C.
20 November 2012
After going through Sec 2(42A) explanation (d) and sec 49(vii) Indexation should be available from the date of acquiring shares of m/s C by m/s B.
Further senior's are welcomed to resolved the query.
Further senior's are welcomed to resolved the query.
Shudhanshu Agrawal
(Expert)
20 November 2012
In accordance withe the proviso to section 48 indexation in the above case shall be allowed if the shares are long term assets.
Definition of long term asset is defined under section 2(29A) which means an capital asset which is not a short term capital asset.
Definition of short term capital asset under section 2(42A) explanation 1(c) includes the period of holding shares from the date of acquisition in the shares of amalgamating company.
Hence in the given situation period of holding shall be considered from the year 2007-08
Definition of long term asset is defined under section 2(29A) which means an capital asset which is not a short term capital asset.
Definition of short term capital asset under section 2(42A) explanation 1(c) includes the period of holding shares from the date of acquisition in the shares of amalgamating company.
Hence in the given situation period of holding shall be considered from the year 2007-08
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