Portfolio management services

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 May 2012 If I give shares to a portfolio management company like ING Investment Management on 25/11/2011 and they sell the same on 29/11/2011, then for the purpose of period of holding, should I consider actual date of purchase or 25/11/2011? However the Portfolio management company has given their capital gain/loss statement on the basis of 25/11/2011. Thus in this case, all shares sold on 29/11/2011 will be classified into short term?

Eg: I purchased 10 shares on 01/04/2008 of Reliance for Rs 10,000. I transferred these shares to Portfolio management co. on 25/11/2011. Fair Value of Shares on 25/11/2011 is Rs 11,500. They sold the same on 29/11/2011 for Rs 12,000.

I am of the view that Rs 1,500 (11,500 - 10,000) will be treated as long term gains and Rs 500 (12,000 - 11,500) will be treated as short term gains.Please confirm whether my view of short term/long term capital gains treatment is correct or not?
If not, suggest the appropriate treatment?

Also the Investment Co. declares the following while giving its audited financial statements:
"This is for information purpose only. Please consult your tax advisor before using this information for any purpose. Cases where client sourcing capital in equity shares (in lieu of funds) the fair value derived on the date of acceptance of the client is considered as cost and such date as the date of acquisition. Capital gains/losses on such shares is calculated accordingly on FIFO principle. Clients are advised to take note of this."

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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03 May 2012 Capital Gain arises when Shares are transferred. A person can not deal with himself. It seems that shares from your Demat Account has been transferred to your another Demat Account maintained by so called INGs.. or PMC.
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The arising Capital Gain will be LTCG and the same is exempt.
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The tentative value recorded by the PMC may be considered for "internal purposes" only.
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