Accounting & Taxation Issues relating to Capital Market Transactions

(ii) On the balance amount of total income as if such balance amount were
the total income.
(G) RIGHT AND BONUS SHARES.
o The period of holding shall be counter from the date of allotment or
right/bonus shares.
o Cost of acquisition of bonus shares shall be taken as NIL at the time
of sale of bonus shares.
o Cost of acquisition in right entitlement is NIL.
o Cost of acquisition of right shares should be taken as amount
actually paid for the right shares.
o Cost of acquisition in case of right entitlement purchased and right
share applied on that basis shall be purchase price paid to
renouncer plus amount paid for the right shares.
NOTE: How Bonus shares can effect you:
(i)
Purchased 100 Equity Shares @ Rs.10/- per share on
29-03-2007.
(ii) Received 100 Bonus Shares on 29-04-2008.
(iii)
(iv)
Above 200 shares sold on 30-12-2008 @ Rs.7/- each.
Long Term Capital loss Rs. 300/- (100x10-7)
Short Term Capital Profit Rs. 700 (100x7)
(H) INTEREST ON BORROWED MONEY.
o If borrowed money is utilized in earning non assessable income
or which does not form part of the total income, no deduction is
allowed U/s 14A However Rule 8D and Notification
No.S.O.547(E) dated 24-03-2008 (299) ITR(ST) 8B.
(I) SECURITY TRANSACTION TAX – NO REBATE U/s 88 E as the
same is applicable to income from Business or Profession only. In any case
rebate U/s 88 E has been discontinued w.e.f. 01-04-2009 (assessment year
2009-10).