Query in respect of Sec 111A of short term capital gain

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CA Umashankar Vaishnav (Querist)

13 September 2010 Query in respect of Sec 111A of short term capital gain of income tax Act, 1961.
Query : Suppose an individual (resident) have the following income for the Assessment Year 2010-11.
A) Short term Capital Gain u/s 111A = 245000.00
B) Business Income = 240000.00
C) Chapter VI A Deductions = 100000.00
Now, my question is how to calculate tax liability in that case.a
Answer: Alternative 1
A) Short term Capital Gain u/s 111A = 245000.00
B) Business Income = 240000.00
Gross total income =Rs.485000.00
Less: Chapter VI A = 100000.00
Net Income = 385000.00
Tax Liability * = 23175.00(as per Vinod K. singhania sir CA Final Book)
Tax Liability * = 34762.50(as per Vinod Gupta sir CA Final Book)
Since taxable income minus short term capital gain is less than exemption limit than relief being calculated as
Relief = Exemption limit –( Net income – Short term capital Gain )
Relief = 160000.00 – ( 385000.00 – 245000.00)
Relief = 20000.00
Now, Short Term Capital Gain Charable to tax = 245000.00 – 20000.00 = 225000.00
Tax rate only in that particular Relief case is 10%(+EC+SHEC) instead of 15% (+EC+SHEC), in any other case where Relief case are not applicable than we use 15% (+EC+SHEC) as specified in Vinod Kumar Singhania sir CA Final Book applicable for the Assessment Year 2010-2011.
*Therefore, Tax liability = 10.30% of 225000.00 = 23175.00

Alternative 2

All solution remain same but difference arises only in case of determining Tax Liability in that particular case
Tax rate in that particular Relief case or in any other case of Sec. 111A is 15%(+EC+SHEC) as specified in Vinod Gupta sir CA Final Book applicable for the Assessment Year 2010-2011.
There is no concept of 10%(+EC+SHEC) In Vinod gupta sir Module of Capital Gain.
*Therefore, Tax liability = 15.45 % of 225000.00 = 34762.50
So, I want to know the real concept and rule in this particular section please help me.

CA.Mini

CA.Mini (Expert)

13 September 2010 following the order of heads.
the exemption limit is first claimed from the business income and the balance from STCG.since the stcg is subject to 15 % .the rate applicable is 15% on the balance taxable amount.for taxplanning we can do the other way round for the benefit of the assessee.

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