29 April 2008
Share warrants are option given by company to purchase share of company at specific rate before specfic period or before specific date for a valuable cosideration so it is not transfer. as holder of share warrants and holder of shares are same person. In other words there is no different identity of transferee & Transferor and this is the exact reason where it is called "convesion" rather than transfer & it will not attract any capital Gain. As conversion place on 01-07-2007 & from that specific date only thewarrant holder becomes equity holder with other rights when he sales the shares on 31-03-2008, the holding period is less than year it will attract short Term Capital Gain.
At the time of allotment of warrants, the company collected ,say, Rs 20/- per warrant and at the date of conversion, the co. issued shares for Rs 200/- thereby collected the balance of Rs 180/-
What is the cost of aquisition of warrants/shares?