By Chirag Nangia
I purchased shares of a listed firm shares in 2015, which was suspended from buying and selling in 2017. In 2018, I bought one other listed firm’s shares at a long run capital achieve. How do I modify the good points with the losses. —M Amala
As per the Income Tax Act, capital achieve or loss arises when a capital asset is transferred. Besides precise switch (sale) of an asset, the time period ‘transfer’ consists of extinguishment of the rights within the asset. Since the shares have solely been delisted and are nonetheless in existence, they can’t be mentioned to have been extinguished or transferred and therefore there might be no capital achieve or loss. Although the funding appears to be fully irrecoverable and is precise loss, you can’t declare this loss because the shares have neither been extinguished nor transferred by you.
Loss might be claimed solely when the corporate goes into liquidation or the shares are literally transferred by you to a different individual for consideration lower than the listed value of acquisition of shares. This long run capital loss may also be set off in opposition to long run capital good points (LTCG), if any, for the yr into account. The achieve on switch of listed shares pertaining to FY 2018-19 should have been declared within the return of revenue of AY 2019-20.
Companies like DHFL and Lakshmi Vilas Bank aren’t traded on inventory exchanges now as they’re below insolvency legislation. How to know which firm has turn into defunct to say brief time period losses? —Ritesh Goyal
Lakshmi Vilas Bank (LVB) has been amalgamated with DBS Bank India (DBIL). It has been established in varied judicial precedents that shareholder’s rights to the shares of an amalgamating firm are extinguished following the amalgamation. Consequent to the merger scheme, efficient from Nov 27, 2020, an extinguishment has occurred in LVB’s shares. One can declare the loss for FY21 which might be carried ahead if there aren’t any matching capital good points to set off. As the shares had been listed, these can be categorised as long-term capital belongings in the event that they had been held for greater than 12 months. Long time period capital loss can solely be set-off in opposition to LTCG. However, brief time period capital losses might be set-off in opposition to each brief/ long run capital achieve. Based in your holding interval, you could set-off losses.
(The author is director, Nangia Andersen India. Send your queries to [email protected])
Source: www.financialexpress.com”