Mr. B acquired 1000 Equity shares of PQR Limited for 400 each in May 2020. The company buyback 200 Equity shares of Mr. B, as per the scheme of…

CA Final · Direct Tax Laws and International Taxation · PYQS · May 2025
Mr. B acquired 1000 Equity shares of PQR Limited for 400 each in May 2020. The company buyback 200 Equity shares of Mr. B, as per the scheme of buyback, in January 2025 at a price of 550 per share. The buyback was completed in January 2025 and Mr. B received the payment as per scheme. He did not sell any other capital asset during F.Y. 2024-25. What amount will be included in the Gross Total Income of Mr. B and what will be the amount of loss to be carried forward (if any) for A.Y. 2025-26 as per the Income-tax Act, 1961?
(A) Long Term Capital Gain of 30,000 will be included under the head "Capital Gains” only. No loss to be carried forward.
(B) Dividend of 30,000 will be included under the head "Income from other sources" and a long-term capital loss off - 80,000 will be carried forward.
(C) Dividend of 1,10,000 will be included under the head "Income from other sources” and a long-term capital loss of 80,000 will be carried forward.
(D) The company will pay additional tax of 23.296% of 25,625 for buyback made from Mr. B and the amount of 1,10,000 will not be taxable in the hands of Mr. B.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

Dividend of 1,10,000 will be included under the head "Income from other sources” and a long-term capital loss of 80,000 will be carried forward.

Topics: Double Taxation Relief, Capital Gains, Non-Resident Taxation

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