STCG or Business Profit.

[Jamshed Mehta]

The applicability of S.111A vis-a-vis the CBTD Circulars and O.M.s.

A.O.s take the view ans pass Orders citing the ref. Circulars.

The A.O.s select certain criteria like frequency of sale/purchase, volume of transactions, holding period and regular monitoring of transactions as in the nature of business. On the other hand criteria like consistency, no business establishment, no interest or other expense decisions, no losses on MTM claim etc. are ignored.

Above all, the case laws up to the SC in every case quote S. 111A for Delivery based transactions to be investments, STCG or LTCG depending on the period of holding being less/more than 12 months.

Therefore why should the CBDT Circulars and O.M.s not be altered to be in line with S. 111A? A.O.'s just harass assessees with these documents.

Additionally, the CBDT Circulars and O.Ms cannot be contrary to law. The Supreme Court has held that circulars issued by the Board are binding in law on all tax authorities and assessees can rely on them for securing whatever relief they are entitled to under the circular.

Jamshed F. Mehta, Mumbai.

AI Summary

CBDT Circulars and Office Memorandums questioned for potential misalignment with Section 111A on Short-Term Capital Gains classification. A discussion initiated by an individual questions the alignment of CBDT Circulars and Office Memorandums (O.M.s) with Section 111A of the Income Tax Act concerning the classification of transactions as Short-Term Capital Gains (STCG) or business profits. The issue arises from Assessing Officers (A.O.s) using criteria like transaction frequency and volume to classify transactions as business activities, while ignoring factors such as consistency and lack of business establishment. The individual argues that the Supreme Court has ruled that CBDT circulars are binding on tax authorities and should align with the law. A respondent suggests addressing the discrepancy with the CBDT in writing.