Classification of Profit from IPO

[viral shah]

Dear All, Pls let me know , can we classify the IPO income as business income, if yes under which section Rgds

[DEV KUMAR KOTHARI]

In case IPO is an adventure in nature of trade, the income will be business income.

If it is adventure in nature of commerce, then income will fall under two heads 'business' - recurring income/ expenses  and 'capital gains' - on transfer of capital assets..

AI Summary

Classification of IPO proceeds: treated as business income when IPO is an adventure in trade; otherwise split with capital gains. Classification of profit from an IPO turns on the activity's character: if the IPO participation is an adventure in the nature of trade, gains are business income; if an adventure in the nature of commerce, receipts split into recurring business income and capital gains on transfer of capital assets.