Determinar Tratamiento y Aptitud Laboral

3.1. Dividends exempt under Section 10(34) of the Act

April 2003) received from a domestic company is exempt in the hands of the shareholders, if such dividends are subject to DDT under Section 115-O of the Act.

No deduction is permitted in respect of expenditure incurred in relation to earning of income which is not chargeable to tax e.g. dividends exempt under Section 10(34) of the Act. The expenditure relatable to “exempt income” needs to be determined in accordance with the provisions specified in Section 14A of the Act read with Rule 8D of the Rules.

3.2. Computation of capital gains

3.2.1. Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition / improvement and expenses incurred in connection with the transfer of a capital asset from the sale consideration to arrive at the amount of capital gains. However, in respect of long-term capital gains, deduction of indexed cost of acquisition / improvement is available. Indexed cost of acquisition means the cost of acquisition multiplied by CII of the FY in which the asset is transferred and divided by the CII of the first FY during which the asset was first held by the tax payer.

3.2.2. As per the provisions of Section 111A of the Act, short-term capital gains (as defined in para 2.4.1 above) on sale of equity shares where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 15% (plus applicable surcharge, education cess and secondary & higher education cess). Short-term capital gains arising from transfer of shares in the Company, other than those covered by Section 111A of the Act, would be subject to tax as calculated under the normal provisions of the Act.

3.2.3. As per the provisions of Section 112 of the Act, long-term capital gains (as defined in para 2.4.1 above) [to the extent not exempt under Section 10(38) of the Act] would be subject to tax at the rate of 20% (plus applicable surcharge, education cess and secondary & higher education cess) and at the rate of 10% on long term capital gains arising from sale of unlisted securities.

However, as per the proviso to Section 112(1) [to the extent not exempt under Section 10(38) of the Act], if the tax on long-term capital gains resulting from transfer of listed securities or units, calculated at the rate of 20% (with indexation benefit) exceeds the tax on long-term gains computed at the rate of 10% (without indexation benefit), then such gains are chargeable to tax at a concessional rate of 10% (without indexation benefit) (plus applicable surcharge, education cess and secondary and higher education cess) without allowance of indexation benefit.

3.3. Capital gains - not subject to Income-tax

3.3.1. According to Section 10(38) of the Act, long-term capital gains on sale of equity shares, where the transaction of sale is chargeable to STT, shall be exempt from tax. However, in case of a shareholder being a company, gains arising from transfer of above referred long-term capital asset shall be taken into account for computing the book profit for the purposes of computation of MAT under Section 115JB of the Act.

3.3.2. Under Section 54EC of the Act and subject to the conditions specified therein, long-term capital gains arising on the transfer of equity shares of the Company would be exempt from tax if such capital gains are invested within 6 months after the date of such transfer in specified assets, being bonds issued by:

a) National Highway Authority of India constituted under Section 3 of The National Highway Authority of India Act, 1988;

b) Rural Electrification Corporation Limited, the Company formed and registered under the Companies Act, 1956.

The investment made in such bonds during any FY cannot exceed ` 5,000,000.

If only part of the capital gain is so reinvested, the exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. However, in case the long term specified asset is transferred or converted into money within 3 years from the date of its acquisition, the amount so exempted shall be chargeable to tax during the year of such transfer or conversion.

As long term capital gains covered under Section 10(38) of the Act are exempt from tax, there is no requirement to invest under Section 54EC of the Act in such cases.

3.3.3. As per provision of Section 54F of the Act, long term capital gains [in case not covered under Section 10(38)] arising from the transfer of any capital asset (not being residential house property) held by an Individual or

Hindu Undivided Family (“HUF”) will be exempt from tax, if net consideration is utilized, within a period of one year before or two year after the date of transfer, for purchase of a residential house, or for construction of a residential house within three years.

3.4. Income from Business Profits

Where the equity shares form a part of stock-in-trade of shareholder, any income realized from disposition of the equity shares would be chargeable under the head “profit and gains of business or profession” as per the provisions of the Act. The nature of the equity shares held by the shareholder (i.e. whether held as „investment‟ or as „stock-in-trade‟) is usually determined inter-alia on the basis of the substantial nature of the transactions, the manner of maintaining books of account, the magnitude of purchases and sales and the ratio between purchases and sales and the holding period.

As per Section 36(xv) of the Act, an amount equal to the STT paid by the tax payer in respect of the taxable securities transactions entered into in the course of his business during the FY will be allowable as deduction, if the income arising from such taxable securities transactions is included in the income computed under the head “Profits and gains of business or profession”.

3.5 Income from other sources

3.5.1. Section 56(2)(vii)

With effect from 1 October 2009, where any property, other than immovable property (including shares) is received by an individual/ HUF : -

i. without consideration and the aggregate fair market value of such property exceeds ` 50,000, or ii. for a consideration which i s less than the aggregate fair market value of such property by at least `

50,000, then the difference between fair market value and consideration paid will be taxable as income from other sources.

This provision is applicable only if shares are held by the shareholders as a capital asset.

This provision is not applicable where shares are received in any of the following modes, namely – 1. From any relative;

2. On the occasion of marriage of the individual; 3. Under a will or by way of inheritance;

4. In contemplation of death of the payer or donor;

5. From any local authority as defined in Explanation to Section 10(20);

6. From any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in Section 10(23C); or

7. From any trust or institution registered under Section 12AA.

3.5.2. Section 56(2)(viia)

Where any property, being shares of a company in which public is substantially interested is received by a firm or a company (not being a company in which public is substantially interested on or after 1 June 2010:-

a. without consideration and the aggregate fair market value of such property exceeds ` 50,000, or b. for a consideration which is less than the aggregate fair market value of such property by at least `

50,000, then the difference between fair market value and consideration paid will be taxable as income from other sources.

However, as per the proviso, the above clause is not applicable to any such property received by way of a transaction not regarded as transfer under clause (via) or (vic) or (vicb) or (vid) or (vii) of Section 47.

3.5.3. Section 56(2)(viib)

With effect from 1 April 2012, a company in which public is substantially interested, received any

consideration for issue of shares, from a resident person, which is less than the face value of such shares, then the difference between face value and consideration paid will be taxable as income from other sources. However the above provisions are not applied in case where the consideration fro issue of shares is received.

a. by a venture undertaking from a venture capital company or aventure capital fund b. by a company from a class or classes of persons as notified by central Government.

4. Benefits available to Non-resident shareholder (Other than Foreign Institutional Investors) under the