Section 94 of ITA, 1961 : Section 94: Avoidance Of Tax By Certain Transactions In Securities

Explanation using Example

Example Application of Section 94 of The Income-tax Act, 1961

Imagine Mr. A owns 1,000 shares of XYZ Ltd. The company announces that it will pay dividends on a certain date, known as the record date. Just before the record date, Mr. A sells his shares to Mr. B, with an agreement that he will buy them back shortly after the dividend is paid. Mr. B receives the dividend since he is the owner of the shares on the r...

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