direct tax [capital gain]

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 August 2010 explain the folloing points-
1- in the case of equity share in a company alloted pursuant to demutulisation or corporatisation of a recognised stock exchange in india , the period for which the person was a member of a recognised stock exchange immediatly prior to suchdemutulisation or corporatisation shall be included in determining the period of holding of such capital asset.
Plz expail in your own words and with example if possible.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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30 August 2010 In the simplest words -
Stock Exchanges are now have been changed into companies. Earlier they were co-operative societies,AOP or whatever..may be.
Old members were having shares in those exchanges.Only members were owner of those exchanges.
Later, SEBI told them to convert themselves into companies -this process is popularly known as corporatisation.
After conversion into Company, almost half of the holding is given to others by alloting shares to them. Existing members also received shares in new exchange against their old ownership. This process is called demutualisation.

Now , if old members transfer their shares,
for calculating Capital Gains, their period of holding would be counted from the beginning. For Public it would be counted from the date when they have been allotted shares on/after corporatisation.

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