Section 94 (7)
This query is : Resolved
16 March 2014
Not understanding this Section.
Section 94(7)
Please give explanation about this section
16 March 2014
lets take an example.
I buy reliance shares on 1 April 2014. The record date for the dividend is 30 June 2014. Let the dividend be Rs 10
I sell the shares on 31 July 2014 and incur a loss of Rs 15.
in this scenario loss of Rs 10 shall be ignored and Rs 5 shall be considered for computation of income.
the idea behind the section is that where you try to just buy and sell equity shares for earning exempt dividend income and incur loss after selling the said stock in immediately (loss normally happens because price falls after the record date), income tax department doesnt want such income to be considered exempt!
This is called dividend stripping
I buy reliance shares on 1 April 2014. The record date for the dividend is 30 June 2014. Let the dividend be Rs 10
I sell the shares on 31 July 2014 and incur a loss of Rs 15.
in this scenario loss of Rs 10 shall be ignored and Rs 5 shall be considered for computation of income.
the idea behind the section is that where you try to just buy and sell equity shares for earning exempt dividend income and incur loss after selling the said stock in immediately (loss normally happens because price falls after the record date), income tax department doesnt want such income to be considered exempt!
This is called dividend stripping
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