Capital gain

This query is : Resolved

CA PRADEEP KUMAR MISHRA (Querist)
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20 November 2012 M/S B acquired the shares of A Ltd in the year 2007-08. M/s B also held Shares of M/s C in the same year. SubsequentlyM/s A was merged with M/s C in the year 2009-10.

M/s B wants to sale the entire shareholding in M/s C in the year 2013-13.

The Shares of M/s C are listed on stock exchange but not traded. Hence the transaction will be off market.

Query : Whether M/s B will be entitled to index cost of acquisition on the shareholding of M/s A which was merged with M/s C.

CA PRADEEP KUMAR MISHRA

CA PRADEEP KUMAR MISHRA (Querist)
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20 November 2012 After going through Sec 2(42A) explanation (d) and sec 49(vii) Indexation should be available from the date of acquiring shares of m/s C by m/s B.

Further senior's are welcomed to resolved the query.

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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20 November 2012 In accordance withe the proviso to section 48 indexation in the above case shall be allowed if the shares are long term assets.

Definition of long term asset is defined under section 2(29A) which means an capital asset which is not a short term capital asset.

Definition of short term capital asset under section 2(42A) explanation 1(c) includes the period of holding shares from the date of acquisition in the shares of amalgamating company.

Hence in the given situation period of holding shall be considered from the year 2007-08

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