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Condonation granted for appeal delay; Long-term Capital Gains deemed business income. CBDT Circular inapplicable. Delay in filing appeal condonation was granted due to pursuing an alternative remedy. The assessee's claim for exemption under section 10(38) for ...
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Condonation granted for appeal delay; Long-term Capital Gains deemed business income. CBDT Circular inapplicable.
Delay in filing appeal condonation was granted due to pursuing an alternative remedy. The assessee's claim for exemption under section 10(38) for Long-term Capital Gains was rejected as evidence indicated shares were held as stock in trade, making the surplus taxable as business income. The application of Circular No.6/2016 by CBDT was deemed inapplicable, leading to the dismissal of the appeal by ITAT CHENNAI.
Issues Involved: Delay in filing appeal condonation, Exemption under section 10(38) for Long-term Capital Gains, Treatment of shares as investment or stock in trade, Application of Circular No.6/2016 issued by CBDT.
Delay in filing appeal condonation: The appeal was delayed by 28 days, attributed to advice from a Chartered Accountant to file a rectification petition before the Ld.CIT(A). The delay was condoned considering pursuit of alternative remedy as a reasonable cause for the delay, with no serious objection from the Sr.DR.
Exemption under section 10(38) for Long-term Capital Gains: The assessee claimed exemption under section 10(38) for Long-term Capital Gains on sale of Equity Shares held for more than one year. The contention was that the gains should be exempted as per section 112 of the Income Tax Act, supported by evidence submitted during assessment proceedings.
Treatment of shares as investment or stock in trade: The main issue revolved around whether the transaction of purchase of shares should be considered as investment or stock in trade. The AO found that shares were shown as stock in trade and debited to the P&L A/c, indicating trading intention. The Circular No.6/2016 issued by CBDT was cited, stating that income from shares treated as stock in trade could be business income. The intention at the time of acquisition was crucial, and in this case, evidence pointed towards shares being held as stock in trade, making the surplus taxable as business income.
Application of Circular No.6/2016 issued by CBDT: The Circular No.6/2016 dated 29.02.2016 issued by CBDT was referred to by the assessee for treating shares as investment under section 10(38). However, the Circular did not apply as the shares were treated as stock in trade based on evidence, leading to the dismissal of the appeal.
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