Taxation of Mutual Fund
This query is : Resolved
13 July 2010
Under Monthly Income Plan (MIP)of Mutual Fund, a person gets dividend on monthly basis depending on surplus position of the fund.The dividend received is exempted under section 10 of the Income Tax Act my query is:
if a person hold MIP for four month only and recived dividend in every month, would dividend stripping u/s 94(7)is applicable.
if a person hold MIP for four month only and recived dividend in every month, would dividend stripping u/s 94(7)is applicable.
13 July 2010
A classic case of dividend stripping.
The section reads
Where—
(a) any person buys or acquires any securities or unit within a period of three months prior to the record date;
[(b) such person sells or transfers—
(i) such securities within a period of three months after such date; or
(ii) such unit within a period of nine months after such date;]
(c) the dividend or income on such securities or unit received or receivable by such person is exempt,
then, the loss, if any, arising to him on account of such purchase and sale of securities or unit, to the extent such loss does not exceed the amount of dividend or income received or receivable on such securities or unit, shall be ignored for the purposes of computing his income chargeable to tax.]
So section 94(7) applicable in case of loss on sale of such units.
The section reads
Where—
(a) any person buys or acquires any securities or unit within a period of three months prior to the record date;
[(b) such person sells or transfers—
(i) such securities within a period of three months after such date; or
(ii) such unit within a period of nine months after such date;]
(c) the dividend or income on such securities or unit received or receivable by such person is exempt,
then, the loss, if any, arising to him on account of such purchase and sale of securities or unit, to the extent such loss does not exceed the amount of dividend or income received or receivable on such securities or unit, shall be ignored for the purposes of computing his income chargeable to tax.]
So section 94(7) applicable in case of loss on sale of such units.
13 July 2010
Thanks
13 July 2010
You are welcome.
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14 July 2010
There is also a recent judgement from SC wrt Dividend stripping.
The judgement is in favour of the Assessee and against the Dept.
Kindly check the judiciary section for the same.
The judgement is in favour of the Assessee and against the Dept.
Kindly check the judiciary section for the same.
14 July 2010
Dear HARIHARAN KRISHNAMURTHY
The judgement of Walfort finance is before the introduction of section 94(7) and not after the inroduction of the section.
Kindly read the facts of the case and revert.
The judgement of Walfort finance is before the introduction of section 94(7) and not after the inroduction of the section.
Kindly read the facts of the case and revert.
15 July 2010
Dear Aditya
I agree with you. I was only referring to the judgement as it is also related to dividend stripping.
I agree with you. I was only referring to the judgement as it is also related to dividend stripping.
15 July 2010
Yes sir is agree it was related to dividend stripping but it is relevant before introduction of Section 94(7) and cases related before and not relevant in current times.
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