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Capital gain related issues

This query is : Resolved 
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(Querist)
06 February 2012 Mrs. Sharmili Shah had acquired 10,000 (Ten Thousand Only) shares of Quick
Wealth Limited @ INR 100/- per share on 01.04.2006. During the year 2008-2009 she
started business of share trading. After consulting her adviser, she converted Shares of
Quick Wealth Limited in stock-in-trade as on 01.10.2008. The market rate as on
01.10.2008 was INR 160/- per share. During the financial year 2010-2011 she sells her
shares @ 200/- in the market. Total STT paid on this transaction is INR 10,000/-.

advice on taxability of capital gain while she
has paid STT on sale transaction.
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Jatin Agrawal

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Jatin Agrawal (Expert)
06 February 2012 for the conversion she'll be liable to be taxed in CG, the taxability will be postponed till actual sale,

so in fy2010-11, she'll pay ltcg on
Sale Consideration 160
-ICOA
(100*582/519) (112.13)
LTCG ~48 per share

the second part of calculation will be under b&p
200-160=40 per share
so 40*10000=40000-10000stt

as u/s. 36(1)(xv)STT is allowed as biz expenditure

[(xv) an amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during the previous year, if the income arising from such taxable securities transactions is included in the income computed under the head “Profits and gains of business or profession”.

Explanation.—For the purposes of this clause, the expressions “securities transaction tax” and “taxable securities transaction” shall have the meanings respectively assigned to them under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004).

(xvi) 87 [***]]
Profile Image

Jatin Agrawal

Profile Image

Jatin Agrawal (Expert)
06 February 2012 for the conversion she'll be liable to be taxed in CG, the taxability will be postponed till actual sale,

so in fy2010-11, she'll pay ltcg on
Sale Consideration 160
-ICOA
(100*582/519) (112.13)
LTCG ~48 per share

the second part of calculation will be under b&p
200-160=40 per share
so 40*10000=40000-10000stt

as u/s. 36(1)(xv)STT is allowed as biz expenditure

[(xv) an amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during the previous year, if the income arising from such taxable securities transactions is included in the income computed under the head “Profits and gains of business or profession”.

Explanation.—For the purposes of this clause, the expressions “securities transaction tax” and “taxable securities transaction” shall have the meanings respectively assigned to them under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004).

(xvi) 87 [***]]
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