Shares in Neha Ltd. was acquired by Mr.Paras at a cost of Rs. $50, 000$ . During the current p.y. he got right to acquire fresh shares on the date of receiving the right entitlement intimation fair market value of existing shares held by Mr. Paras was Rs. $60, 000$ . Mr. Paras sold the right paper for Rs. $75, 000$ . His capital gains liability would be:

Rs.

10, 000

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Rs.

75, 000

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Rs.

25, 000

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Rs.

15, 000

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Solution

The correct option is B Rs. $75, 000$
Right issue of shares is offered to the existing shareholders of the company. Right shares may be issued at certain price which shareholders to pay off.
In the given situation, shareholder has not exercised the right issue for himself and sold the right paper for Rs.75000/-
Nothing is paid against the right issue, hence cost of right will be zero.

Sale of right paper Rs.75000
Cost to acquire right issue Rs.0
Capital Gain on sale of right issue Rs.75000

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