Sale of shares

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KALYANA SUNDARAM.T.V. (Querist)
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01 November 2011 I am working in a sister concern of closely held company (both are closely held companies) and having a total share of 10,000 which includes public, rights and bonus issue.

Now my parent concern is proposing to buy my share as per the details given below:

1. 50% of my shares (ie., received out of public and rights issue shares) at say Rs. 50 per share in this month.

2. Balance in the month of May - 2012 at the above said price.

3. There are some old receivables and if the same is collected before May - 2012 i will get a price of Rs. 10 extra per share.

Now my query is as follows:

1. Is it legally correct? (ie., the price can be settled in two instalments).

2. Whether the shares can be partly transferred for the consideration received.

3. What will be incidence of the tax in my case with point no.3 and with out point no.3.

Regards

Kalyan

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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07 November 2011 Logically the tax incidence depends upon the cost of acquisition of asset transferred and its sales consideration following the FIFO method.
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Cost of Bonus Shares is taken to be zero.
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In the above case, I do not feel that legally there will be any problem.
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First your original shares will be transferred by taking the consideration paid by you in respect of these, as cost of acquisition.
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In case, of shares sold after a holding period of 1 year you can get indexation benefit.
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The consideration will increase if Point No 3 is applied which will result into higher capital gains ultimately.

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