Loss/profit on sale of shares.

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This query is : Resolved

Shruti Mishra (Querist)

19 September 2014 Dear All,

A private ltd company - A holds investment (Equity) in another pvt ltd company - B. also in the pursuing yrs, the shareholder A makes payment towards the company B (property purchase,ADVANCES) which is debited to the investment a/c

My qstn is -
1. was it correct to increase the investment a/c?

2. what would be the accounting treatment in the books of the company on sale of shares?

3. What would be the tax implications ?

Nikhil Kaushik

Nikhil Kaushik (Expert)

20 September 2014 ideally such payments should not be transferred to the investment a/c in which payment for shares are held

you will book the sale consideration received and net profit or loss will be transferred to profit and loss account

if the company (investee) is not listed, then shares will be taxed as LTCG/STCG depending on holding period

if the company (investee) is listed, then long term capital gains wont be taxed

Shruti Mishra

Shruti Mishra (Querist)

21 September 2014 Thank you Mr. Nikhil Kaushik..

Nikhil Kaushik

Nikhil Kaushik (Expert)

21 September 2014 you are welcome Shruti..

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