why is any consideration received incase of sale of rights is asjusted againast investments?
3 Replies
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 23 June 2011
I am not an expert but let me put my views.Rights are Premptive Rights as per Sec81.If u have acquired Rights then it would add to cost of Investments.If u have Renounced the rights nothing need to be done but in case if u have sold the rights it has to be deducted from cost of Investments since your ownership is transfered
waiting for bright students comment on this please
olidipu42
(student)
(26 Points)
Replied 23 June 2011
| Originally posted by : sivaram | ||
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but if u dont acquire those rights and sold to the third party in consideration of some nominal value...
then why it is related with the investment cost...
the entry was:
bank a/c...dr
To sale of rights a/c...cr
_________________________________________
sale of rights a/c...dr
To investments a/c...cr
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 24 June 2011
This doubt i too had it seems to be like this
Since right is preemptive ie u being the previous shareholder you are alloted rights instead you purchase and then sell You directly hand over the rights to a third party.even then AS-13 dictates to reduce sale of proceeds of Rights from Investments
I expect some bright students to clarify this please
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