The assessee sold one property in April 2014 on which LTCG of Rs. 50,00,000/- is accruing. The assessee does not want to invest in another residential property for claiming exemption u/s 54. Also the option to invest in bonds specified u/s 54EC has expired since the investment should be done within 6 months of transfer of such property. Kindly advise whether resorting to Bonus Stripping in shares would constitute Tax Evasion since the whole purpose of booking loss under the head "Capital Gains " through Bonus Stripping is for adjustment against LTCG.If yes, kindly suggest suitable Tax Planning.

Dear Acharya,

Legally bonus stripping in shares have not been blocked by Income Tax yet. Although units have been covered under section 94(8).

So Govt. may cover shares also under this section with retrospective effect treating it a clarificatory amendment like it has done in past also. So it is not advised to go for this option considering the above risk.

Othewise, in our opinion, there does not seem any legal tax planning to save tax on sale of residential property except section 54 and 54EC.

If you have any question, Pl post the same.

Kind Regards
TaxReply.com

 

i do not see gthere is any problom. section 94(8) has not covered share stripping till date