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of <h1>CBDT Clarifies Share Classification: Stock-in-Trade vs. Investments Under Income Tax Act 1961 for Accurate Tax Assessment.</h1> The circular issued by the Central Board of Direct Taxes (CBDT) clarifies the distinction between shares held as stock-in-trade and those held as investments under the Income Tax Act, 1961. It references judicial decisions to guide assessing officers in determining whether shares are held as capital assets or trading assets. Key principles include examining the nature of transactions, the maintenance of accounts, and the intent behind purchasing shares. The circular emphasizes that taxpayers can maintain separate portfolios for investments and trading, potentially resulting in both capital gains and business income. Assessing officers are advised to consider all principles collectively to make this determination.
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