Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
18 November 2009Dear Members;
Which date will be date of acquisition for purpose of transfer of Bonus Shares?
Will it be GM date where Bonus is declared?
Will it be Allotment Date where Bonus Shares are allotted?
Will it be exchange date: the date on which price of such Share in stock exchange are diluted due to bonus?
Will it be date of credit in the De-mat Account?
Plz give your response with relevant justification.
Regards
Juzer
CA Mohit Agrawal
(Chartered Accountant)
(371 Points)
Replied 18 November 2009
i think the date of allotment will be taken
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 18 November 2009
Dear Mohit,
Thanks for your response, would you be kind enough to justfy why date of allotment is to be taken? also what is allotment?
Regards
CA Devanshi Gandhi (Ajani)
(FCA DISA Mcom CIFRS & LLB)
(9060 Points)
Replied 18 November 2009
from the date of allotment
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 18 November 2009
One clarification, Date of allotment is date on which the Company has booked the allotment in thier books of Account.
Plz justify your answer, I dont want guesses.
Regards
Juzer
CA Devanshi Gandhi (Ajani)
(FCA DISA Mcom CIFRS & LLB)
(9060 Points)
Replied 18 November 2009
under income tax act its mentioned that period of holding in case of bonus shares must be calculated from the date of allotment
Sunil
(Trader)
(2611 Points)
Replied 18 November 2009
To determine the date of aquisition whether it is LTCG or STCG, they take the date of allotment as the date. It has been in practice even when there were physical share whether it came by bonus or by IPO. You normally get the allotment letter indicating that those shares stand in your name and certificate will be sent to you (or it will be credited to your DEMAT A/C). When I had a scrutiny the AO asked for the allotment letter of the bonus Shares and Demat statement for crediting of shares of orignal shares as well as bonus for determination of first in and out. He calculated days using allotment even though that was disadvantage to department. In any case it would not have made a difference. It was LTCG subject to 10% either way.
I did not bother to ask. But if I were to justify, the right to the asset is mine from the date it is alloted to me as I fulfilled the condition of record date to be alloted the bonus in the first place and I would have received them in any case even if i would have sold my original shares before having the bonus in my account. Same way as I am accruing income without receiving the payment physically and receive a cheque. Bank credits my account even before it is cleared and I can issue a cheque only when my funds are clear in my account. I can issue transfer order only when the shares are physically in the Demat Account. In both case I am the person entitled to and have the right to the funds or shares whether they have reached the account or not.
Similar for Purchase of shares. Your date of Purchase is before the shares are received to your account.
However assessments are inconsistent from AO to AO and therefore what may have been assessed for me may not be so for a similar situation for another assessee.
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 18 November 2009
| Originally posted by :CA Devanshi Gandhi | ||
| " | under income tax act its mentioned that period of holding in case of bonus shares must be calculated from the date of allotment | " |
Dear Devanshi Mam,
May I request you to provide me guidance on where in Income Tax Act/Rules it is written that date of acquisition of Bonus share shall be date of allotment and meaning of "allotment"
I would realy appriciate you response on this.
Dear Sunil Sir,
In our case we are required to standardise date of bonus as such type of instances would be frenquently raised in our oridenary course of services. To standardise it, I need some good justifications and ground on which we can take either of above date so as customer do get proper advantage and plan their long term holding and gains therefrom.
Thanks and Regards.
Juzer Sadikot
Sunil
(Trader)
(2611 Points)
Replied 18 November 2009
Dear Juzer
You are actually looking at only DEMAT shares. However, please go back in time when physical shares were in vogue and refer to ready recknoners of Singhania and Nabhi of those times. The shares were always alloted and the stamping was done as on date of allotment. They had to affix revenue stamp on the shares in those days and valuation was done as per the date of allotment for purpose of fixing those revenue stamps on physical shares. Even for Pvt. Ltd. companies you are filing a return of allotment. Company is giving you an allotment letter whether you are having physical or demat shares.
Whenever a physically bonus share was alloted, check the date of issue of the letter alloting you that shares. the shares may come to your address later due to postal delays but in the ready reckoners they normally used to specify date of allotment.
After your post I checked the allotment letters I have had for Demat Bonus Shares. What I find strange in all of them is that the letter date, allotment date and date of credit written on the allotment letter is the same. On checking Demat account, they are indeed credited on the same date. therefore there must be a procedure to issue allotment letter after crediting the account as the allotment lettter has to mention date of crediting the account. I suggest you check the correspondences received from the companies and corelate before arriving at a conclusion.
The question of allotment date disputes were not normally for bonus shares. They were generally for physical shares where in IPO the allotment was done but physical shares were signed later than that date and amount was already paid in the IPOs. Therefore they reckoned date of acquisition as allotment date and not the date of signing of certificate and cost at the application price. There were clarifications for this. You will have to go way back when physical shares were in vogue to check this out and then go forward to see if any law has changed. There were also instances when full money was never paid at allotment and were on one or two calls. Still they were being transferredat lower prices and transferees paid the call moneys. Benefit of CG was given on basis of allotment.
Interesting thread started by you. Let us see what views the Stalwarts have for this.
CA Devanshi Gandhi (Ajani)
(FCA DISA Mcom CIFRS & LLB)
(9060 Points)
Replied 18 November 2009
3[(d) in the case of a capital asset, being a share or any other security (hereafter in this clause referred to as the financial asset) subscribed to by the assessee on the basis of his right to subscribe to such financial asset or subscribed to by the person in whose favour the assessee has renounced his right to subscribe to such financial asset, the period shall be reckoned from the date of allotment of such financial asset ;
(e) in the case of a capital asset, being the right to subscribe to any financial asset, which is renounced in favour of any other person, the period shall be reckoned from the date of the offer of such right by the company or institution, as the case may be, making such offer ;]
4 [(f) in the case of a capital asset, being a financial asset, allotted without any payment and on the basis of holding of any other financial asset, the period shall be reckoned from the date of the allotment of such financial asset ;]
above reference is for bonus issue, right issue and right entitlements
refer section 2 definations on income tax department website
CA Devanshi Gandhi (Ajani)
(FCA DISA Mcom CIFRS & LLB)
(9060 Points)
Replied 18 November 2009
hope ur clear....
vijaydeepsingh
(article)
(71 Points)
Replied 18 November 2009
Its the date when share are alloted by company
If through broker then when this is entered in your demant account. inother word the day the bonus shares are transacted in your account by broker
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 18 November 2009
Dear Devanshi Mam,
What is allotment date?
Regards
Juzer
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 18 November 2009
Dear Sunil Sir,
My concern is for Sale of bonus shares of listed Companies.
Further I have the procedure of listing and due to intorduction of mechnism of dematerialsation, there are so many different dates which may come to our eyes.
Starting from Date of decision of allotment in AGM, Record date (recording in register of share holders), Exchange date (dilution of price in stock exchange), Delivery date (date of entry in Demat statement) etc. It is difucult to term which event as an allotment.
There is also concept of No delivery period in such days(period) the delivery of shares are banned to give/take, only one can do non delivery transaction of such shares.
I would appriciate if you can give some guidance keeping in mind above facts.
Regards
Juzer
CA Devanshi Gandhi (Ajani)
(FCA DISA Mcom CIFRS & LLB)
(9060 Points)
Replied 18 November 2009
date of allotment is the date on which the shares are issued to the holder i.e when the reserve is transfered to share capital account
normally a company sents an allotment advice which mention the date of allotment to the shareholders...and they also mention the cost of the same also for the calculation of the taxation purpose
CAclubindia
