Thursday, May 15, 2014

Section 94 - Avoidance of Tax by certain Transactions in Securities - Bonus Stripping

The Bangalore Bench of ITAT has held that where assessee purchased certain shares immediately prior to allotment of bonus shares and after allotment of those shares original shares whose value had reduced to almost 50 per cent were sold, said transaction being in nature of ‘bonus stripping’ was covered under section 94(8) and, since said section covered only ‘units’ and not ‘securities’, assessee’s claim for set off of said loss could not be disallowed.

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