Capital gains on company buy-back: valuation rule treats certain buy-back consideration as nil, altering shareholder tax treatment. Section 46A deems the difference between a shareholder's cost of acquisition and consideration received on a company's purchase of its own shares to be capital gains in the year of buy-back, subject to section 48; 'specified securities' includes employee stock options. Section 46A does not apply to unlisted share buy-backs after introduction of section 115QA and section 10(34A). For listed-share buy-backs no deemed dividend under section 2(22) arises and corporate tax consequences like section 115-O or 115QA do not apply. An amendment deems the value of certain buy-back consideration to be nil for Section 46A purposes for buy-backs on or after the effective date.
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Provisions expressly mentioned in the judgment/order text.
Capital gains on company buy-back: valuation rule treats certain buy-back consideration as nil, altering shareholder tax treatment.
Section 46A deems the difference between a shareholder's cost of acquisition and consideration received on a company's purchase of its own shares to be capital gains in the year of buy-back, subject to section 48; "specified securities" includes employee stock options. Section 46A does not apply to unlisted share buy-backs after introduction of section 115QA and section 10(34A). For listed-share buy-backs no deemed dividend under section 2(22) arises and corporate tax consequences like section 115-O or 115QA do not apply. An amendment deems the value of certain buy-back consideration to be nil for Section 46A purposes for buy-backs on or after the effective date.
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