Capital Gain

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CA Miss Naamah (Querist)

14 January 2011 There are 3 partners A, B and C. They hold 900 equity shares in joint name in physical form. Now they wish to sell these shares. So, they transferred these shares in the name of A and Mrs. A, as they are having demat account in joint name. What will be the tax liability of A, B and C??? Mrs. A income is clubbed with Mr. A.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

14 January 2011 Transfer of shares in A's name( Mrs. A is a joint Demat A/c holder only with Mr A) by A,B & C has been done just for the sake of bringing the commodity at a place from where it could be sold.

A, B and C will be liable for tax.
( it can be said a case of diversion of income.)

As, practically,there is no income arises to Mrs C from such transfer, question of clubbing of income will not arise.

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CA Miss Naamah

CA Miss Naamah (Querist)

16 January 2011 Will B and C will be liable for STCG or LTCG???

CA Miss Naamah

CA Miss Naamah (Querist)

20 January 2011 Will B and C will be liable for STCG or LTCG???

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

21 January 2011 Yes, because they were also having beneficial interest in shares. CAPITAL GAIN WILL BE DISTRIBUTED IN THE PROPORTION OF HOLDING. IN THIS CASE IF ALL HAVE INVESTED EQUAL AMOUNT, 1/3RD OF PROFIT WILL BE ADDED IN THE INCOME OF A.B. & C .

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