Income chargeable under Which Head?

[Guest]

The assesse is dealing in purchase and sale of shares of various companies. Under which head he is liable to Income tax? Whether he is liable under Capital gains or under Speculative Business.The Assesse is Individual and his main activity is only purchase and sale of Shares.

[DEV KUMAR KOTHARI]

The assesse is  (a) dealing in purchase and sale of shares  (b) of various companies (c) his main activity is only purchase and sale of Shares.

Under which head he is liable to Income tax?   Whether he is liable under Capital gains or under Speculative Business?.

 

Ans.According to the facts given by you the assessee is primarily engaged in share trading, and this is his business and vocation. He is dealing in  shares of various companies. Under these circumstances he can be considered as engaged in share trading activity. Therefore, income falls under the head business income. Dependign on nature of transactions the income will be normal or speculative business income.

However, even a sharetrader can hold share on investment a/c, if the intention is to hold shares some of shares as investment that is as capital asset, then the income from sale fo such investmetns shall be 'capital gains'.

YOu can refer to various articles and judgments referred to therein on these issues.

 

 

  

AI Summary

Share Trader's Income: Business Income or Capital Gains? Clarification on Tax Implications Based on Activity Nature. An individual engaged solely in the purchase and sale of shares questioned whether their income should be taxed under capital gains or speculative business. The response clarified that since the individual primarily engages in share trading as a business activity, the income should be classified as business income. Depending on the transaction nature, it could be normal or speculative business income. However, if shares are held as investments with the intention of long-term holding, the income from their sale would be considered capital gains.