The Hindu Business Line : Can long-term equity losses be moved to the immovable domain?

CAN long-term capital loss arising from the transfer of equity shares of Indian companies be set off against the long term capital gains arising from the transfer of immovable properties?

M. K. Visvesvara

Reply

The long-term capital loss arising from the transfer of equity shares of Indian companies can be set off against the long-term capital gain arising from the transfer of immovable properties.

If, however, the long term capital gains, if any, arising from the transfer of equity shares were to be exempt u/s.10(36) by virtue of satisfying the following conditions, the set off of loss against the gain from sale of immovable property will not be possible.

The long-term capital asset is an eligible equity share in a company

The share was purchased on or after March 1, 2003 but before March 1,, 2004.

Eligible equity has been defined in the section to be shares purchased in the secondary market and where such share is a constituent of the BSE — 500 index of the stock exchange, Mumbai on March 1, 2003 and where the purchase and sale is entered into in a recognised stock exchange in India.

If the share is allotted through a public issue on or after March 1, 2003 and is listed in a recognised stock exchange before March 1, 2004 and the transaction of sale is entered into in a recognised stock exchange in India, the condition stands satisfied.

Similarly if any gain arising from the transfer of equity shares were to be exempt u/s.10(38) by virtue of satisfying the following conditions, the set off will not be possible:

The transaction of sale of such equity shares or units is entered into after the coming into force of securities transaction tax, that is, on or after October 1,2004.

Such transaction is chargeable to securities transaction tax, that is, where the sale is through a recognised stock exchange.

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