Page 341 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes 4. In the case of a capital asset, being a share or any other security 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.
5. In the case of capital assets, 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.

6. 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.

7. In the case of a capital asset, being a share or shares in an Indian company, which becomes
the property of the assessee in consideration of a demerger, there shall be included the
period for which the share or shares held in the demerged company were held by the
assessee.
8. In the case of a capital asset, being trading or clearing rights of a recognized stock exchange
in India acquired by a person pursuant to demutualisation or corporatisation of the
recognized stock exchange in India as referred to in Clause (xiii) of Section 47, there shall
be included the period for which the person was a member of the recognized stock
exchange in India immediately prior to such demutualisation or corporatisation.

9. In the case of a capital asset, being equity share or shares in a company allotted pursuant
to demutualisation or corporatisation of a recognised stock exchange in India as referred
to in Clause (xiii) of Section 47, there shall be included the period for which the person was
a member of the recognized stock exchange in India immediately prior to such
demutualisation or corporatisation.

Calculation of Short Term Capital Gains (STCG)
Notes
Value of consideration
Less: expenditure incurred wholly and exclusively in connection with such transfer
Less: cost of acquisition
Less: cost of improvement
Less: Exemption(s) available, if any.
The balancing amount is short-term capital gain
Assets other than short-term capital assets are known as ‘long-term capital assets’ and the gains
arising therefrom are known as ‘long-term capital gains’. Note that with effect from assessment
year 1988–89, a share, equity or preference held by an assessee would be regarded as a long-term
capital asset if the ownership is for more than 12 months with him. In the case of other long-
term capital assets, the period of holding is determinable subject to any rules made by CBDT.

Zero Coupon Bonds

The Finance Act, 2005 has introduced the procedure regarding the taxation of the income on the
Zero Coupon Bonds being issued on or after 1.6.2005. “Zero Coupon Bond” as defined under
Section 2(48) means a bond:
(a) Issued by any infrastructure capital company or infrastructure capital fund or public sector
company on or after the 1st day of June, 2005;

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