Disallowances U/S 94(7)

[S.C. WADHWA]

Dear Sir,

Our company had invested ₹one lac by purchasing 10000 units of a mutual fund  on daily dividend pay out on 26.4.2010.  Sold one thosand units on 24.7.10 and suffers loss of ₹ 2500/- but dividend recd ₹2200/-. Then 1000 units sold on 24.8.10 and suffers loss of ₹ 1300/- but dividend recd ₹ 4100/- till date.  Then on 27.10.10 1000 units sold and get profit ₹3700/- but dividend recd ₹5700/- till date on daily basis.  Balance 7000 units sold on 27.3.11 and get profit of ₹ 17000/- alongwith dividend of ₹ 9500/- till date. Recod date is not known to us.

Now my query is that if any amount of loss suffered on sale of units to be disallowed in income tax or not. Pls advise.

Regards,

WADHWA

AI Summary

Company Questions Tax Treatment of Mutual Fund Unit Sale Losses; Advised to Consult Chartered Accountant for Guidance. A company invested 1,00,000 in a mutual fund with daily dividend payouts, purchasing 10,000 units on April 26, 2010. They sold units in several transactions, incurring losses and gains while receiving dividends. The transactions included losses of 2,500 and 1,300 on July 24 and August 24, 2010, respectively, and profits of 3,700 on October 27, 2010, and 17,000 on March 27, 2011. The dividends received varied with each transaction. The company inquired whether the losses on unit sales should be disallowed for income tax purposes. The advice given was to consult a Chartered Accountant.