Xavier, citizen of India a resident individual engaged in salaried employment in Ahmedabad purchased 3000 shares on 03.07.2020 in CD Ltd, @₹75 per share. On 10.07.2020, these 3000 shares were gifted by him to his wife. C

CS Executive · Tax Laws · PYQS · December 2021
Xavier, citizen of India a resident individual engaged in salaried employment in Ahmedabad purchased 3000 shares on 03.07.2020 in CD Ltd, @₹75 per share. On 10.07.2020, these 3000 shares were gifted by him to his wife. CD Ltd allotted 1000 bonus shares to Mrs. Xavier on 30.01.2021. Mrs. Xavier on 05.03.2021 sold/transferred 4000 shares of CD Ltd for ₹ 150 per share to Rajeev outside stock exchange. On the date of sale (05.03.21), the lowest quotation of shares of CD Ltd at BSE was ₹250 per share. The tax implication of the above transactions in the hands of Mr. and Mrs. Xavier for A.Y. 2021-22 will be:
(A) The LTCG arising on transfer of 4000 shares will be taxable in the hands of Xavier by virtue of sec. 64(1)(iv)
(B) The STCG arising on transfer of 4000 shares will be taxable in the hands of Xavier by virtue of sec. 64(1)(iv)
(C) The STCG of ₹ 2,25,000 arising on transfer of original shares will be included in the income of Xavier and STCG of ₹1,50,000 arising on transfer of bonus shares will be taxable as income of Mrs. Xavier.
(D) The STCG of ₹5,25,000 arising on transfer of original shares will be included in the income of Xavier and STCG of ₹2,50,000 arising on transfer of bonus shares will be taxable as income of Mrs. Xavier

Answer & Explanation:

Correct Answer: Option (D)

Official answer key: (D).

Topics: Income Tax Act, 1961

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