Clubbing of income
This query is : Resolved
06 May 2017
Mr.X transfer Shares to his wife Mrs. X without consideration. My questions are:-
1. Dividend, if covered by Sec115-O will be exempt in the hands of recipient, hence no clubbing ?
2. If shares are listed and STT has been paid, no capital gain on transfer of shares. Period of holding will be from date of transfer of shares to Mrs. X or held by Mr. X.
3. If the company has paid Bonus Shares, will the capital gain on transfer of them will be taxable in the hand of Mrs. X or Mr. X and for the purpose of shares held for more than 12 months and sold in a share market where STT has been paid, period of holding for the Bonus Shares.
Thanks
Rupesh Nigam
1. Dividend, if covered by Sec115-O will be exempt in the hands of recipient, hence no clubbing ?
2. If shares are listed and STT has been paid, no capital gain on transfer of shares. Period of holding will be from date of transfer of shares to Mrs. X or held by Mr. X.
3. If the company has paid Bonus Shares, will the capital gain on transfer of them will be taxable in the hand of Mrs. X or Mr. X and for the purpose of shares held for more than 12 months and sold in a share market where STT has been paid, period of holding for the Bonus Shares.
Thanks
Rupesh Nigam
06 May 2017
1. Yes, Dividend received u/s 115-O is exempt under section 10(34) and hence no clubbing.
2.As per 2(42A) period of holding in the hands of original buyer is to be considered i.e, holding period is to be seen from date when Mr. X has purchased shares and not from date of transfer.
3. Capital gains on sale of bonus shares are also clubbed in the income of husband and period of holding is to seen from the date of allotment of such bonus shares.
However, if any shares/debentures are purchased by Mrs. X out of sale proceeds of bonus shares, any income from such shares/debentures will not clubbed and taxable separately in the hands of Mrs.X
2.As per 2(42A) period of holding in the hands of original buyer is to be considered i.e, holding period is to be seen from date when Mr. X has purchased shares and not from date of transfer.
3. Capital gains on sale of bonus shares are also clubbed in the income of husband and period of holding is to seen from the date of allotment of such bonus shares.
However, if any shares/debentures are purchased by Mrs. X out of sale proceeds of bonus shares, any income from such shares/debentures will not clubbed and taxable separately in the hands of Mrs.X
06 May 2017
Thanks for the reply
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