Mr. B purchases 1,000 equity shares of Rs. 10 each of X Ltd. on 1-6-12 at Rs. 54 per share and sold on…

Under the dividend-stripping provision in Section 175 of the Income-tax Act, 2025 (formerly Section 94(7) of the Income-tax Act, 1961), when shares are bought within 3 months before the record date and sold within 3 months after it, any resulting capital loss is ignored to the extent of the tax-free dividend received. The gross short-term loss is $1,000 \times (\text{Rs. }54 - \text{Rs. }46) = \text{Rs. }8,000$ and the tax-free dividend is $1,000 \times \text{Rs. }10 \times 50\% = \text{Rs. }5,000$, leaving $\text{Rs. }8,000 - \text{Rs. }5,000 = \text{Rs. }3,000$ eligible for set-off.