Long term capital gain

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This query is : Resolved

rahul (Querist)

09 June 2009 Dear all,

case:

Asessee is holding equity shares in the individual name, but the same was shown as investments in the partnership firm in which he is the partner. The transfer and holding is for more than one year.
Now assessee plans to sell the shares in the recocgnised stock exchange attracting STT (were the demat account is in his individual name)by the keeping the shares in the partnerhsip firm.

Query:

1. can we show equity shares as investments in the partnership firm as in the above case.

2. Will the partership firm be eligible to claim exemption on the long term capital gain.

3. If not, Please suggest for tax planning.

CA.BHARAT BHUSHAN

CA.BHARAT BHUSHAN (Expert)

09 June 2009 Your treatment of showing the eq.shares purchased on the name of partner, in firm's balance sheet can put you in deep trouble...it there is loss to income tax department from any way. Basically, if the D-Mat A/c is not on the name of the firm, then it will be very difficult to prove the ownership of the firm. Suppose..if you subscribe for IPO of more then Rs.100000/- then u have to report through AIR..but in ITD's database shares will be on the name of partner.

You do thing adjust the shares purchased with the capital a/c of the partner on whose name shares are purchased...and compute the interest accordingly...i think from way there will no loss of tax to ITD...rest depends upon the case.

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