Tax Query: How can I claim capital loss from DHFL shares/NCDs?

Can I claim capital loss with regard to DHFL shares? It is not even showing in my demat statement. The company had gone to NCLT. Please advise.

Khursheed

Capital gains/loss comes into the picture only when a capital asset is transferred. As per provisions of section 2(47) of the Income-tax Act, 1961 “transfer “in relation to a capital asset, includes –

(i) sale, exchange, or relinquishment of the asset ; or

(ii) extinguishment of any rights therein; or ……. ”

(iii) ….

We understand that the company has gone to the National Company Law Tribunal (NCLT) and the shares have been delisted.

In case the company has gone into liquidation or the company has been referred to NCLT under Insolvency and Bankruptcy Code and the NCLT has authorised the company to extinguish the shares, you can claim the loss.

However, if the shares still exist, you would be able to book the losses upon transfer of these shares which could be on buyback by the company or liquidation of company or sale outside stock exchange.

I had invested ₹5 lakh in DHFL NCD. After the insolvency of the said institution, the acquirer had settled the said investment by paying ₹2,27,901 back to me. How can I claim this loss in my tax return?

K Shankara Rajan

As pointed out in the response to the earlier question, capital gains/loss come into the picture only when a capital asset is transferred. As per provisions of section 2(47) of the Income-tax Act, 1961 “transfer “in relation to a capital asset, includes –

(i) sale, exchange, or relinquishment of the asset ; or

(ii) extinguishment of any rights therein; or ……. ”

(iii) ….

In the instant case, post liquidation, I understand that the NCDs no longer exist and you have received consideration for extinguishment of rights. The same would amount to transfer and accordingly capital gains/loss would arise.

The nature of capital gains/loss would be determined based on the period of holding of such NCD. The capital loss would qualify as Long-Term Capital Loss (LTCL) in case the NCDs were held for a period exceeding 36 months (12 months in case of listed NCD). If otherwise, it would qualify as Short-Term Capital Loss (STCL).

The LTCL can be adjusted only against the Long term Capital Gains. However, the STCL can be adjusted both against LTCG and STCG. Unadjusted loss, if any, can be carried forward to the subsequent assessment years.

My insurance policy premium due falls on March 21 every year and I pay it only during April of each year — after 10 days from when it is due. In which FY can I claim 80C deductions for the premium paid?

Sankaran M

Deduction under section 80C is available on payment basis. In respect of premium paid on your insurance policy (which is due in March), deduction will be available in the year of payment of the premium. We understand that you have made the payment in April, hence deduction can be claimed in the FY when premium is paid, i.e. in April.

The writer is a practising chartered accountant

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