Bond washing anti-avoidance rules deem diverted interest on securities income to the original owner despite temporary transfer and reacquisition.

Anti-avoidance rules on bond washing transactions deem interest on securities to be the income of the original owner where the owner sells or transfers securities before interest becomes payable and later buys back or reacquires the same or similar securities. The deeming fiction applies even if the interest is actually received by another person, and similar securities are treated on the same footing as the original securities so that no greater tax liability arises merely because the reacquisition is of similar securities rather than identical securities. The Assessing Officer may issue a written notice requiring information relating to securities, with at least twenty-eight days for compliance.

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