Exemption on capital gain

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Querist : Anonymous

Querist : Anonymous (Querist)

16 January 2012 A Director of a Company who holds the shares of the Company had sold the Shares during the time of selling the Company.Such differential sale proceeds are taxed as Capital Gains. However the Director has claimed exemption for using the money towards his company related expenditure ( payment towards settlement )
which is also a part of the Sale Purchase Agreement. This is ruled out by Comm of Income Tax ( Appeals )stating that the expenditure is for the Company and an individual cannot claim exemption.
My contention is that a Director will be holding shares on behalf of the Company and therefore all gains and losses pertaining to sale/purchase of shares on behalf of the compnay should be allowed.

Require experts comments on the above please

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

16 January 2012 Director is a shareholder of the company. It can not be said that he held shares on behalf of the company itself. He can claim the expenditure incurred directly in connection with sale of his shares.
You may create a nexus between the settlement and sale of shareholding of the director then only expenditure may be allowable. Expenditure incurred for the purpose of company can not be deductible.

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