The querist is a Corporate Assessee situate at Mumbai.
The Company had subscribed for 1000 nos Secured Redeemable Non Convertible Debentures (NCDs) of L&T Finance Ltd under Public Issue of the face value of Rs. 1000/- on Cumulative Compounded Annual Option. (Total investment was Rs. 10,00,000/-).
The NCDs were allotted to the Company on or about 22-09-2009.
NCDs are traded on Stock Exchanges. On sale or purchase of NCDs through Stock Exchange, no Security Transaction Tax (STT) is applicable.
The Company has sold the said NCDs of face value of Rs. 1000/- through a recognized Stock Exchange at Mumbai @ Rs. 1135/- on 2 June 2011 i.e. after 20 months. Thus the Company has received gain of Rs. 135/- on sale of each NCD i.e. total gain of Rs.1,35,000/-.
We would like to secure advice as regards to applicability of Income Tax on the net gain of Rs.1,35,000/- received against sale of the NCDs. Will the gain be treated as long term capital gain with indexation benefit? If yes, then under which section of the Income Tax ?
CAclubindia
