Business profit vs STCG

[DEV KUMAR KOTHARI]

Whether a professional person like CA,CS, CWA, doctor, engineer, advocate etc. or a director, company executive can be considered as a 'share trader' instead of 'investor', merely becasue his volume of transactions in sahres, units is high and some time borrowed money is also used. Whether it will be proper for the A.O. to treat transactions in shares and units resulting in business profit and not STCG? In my view such view will be patently wrong because such persons are not known as trader of shares or units by the persons who know to him in commercial world, furthermore, nvestmetn is a commercial adventure and not a trading venture. Shares are capital assets of commercial venture and not stock-in-trade of adventure in nature of trade.

[Surender Gupta]

Not only the department but assessee also is in dilemma while deciding the issues related to taxability of the transaction in shares. Our legislatures must come out with reasonable solutions to address this issue and to mitigate the litigation.

AI Summary

Share trader status affects classification as business income or short-term capital gain; calls for statutory clarity.
Whether professionals or company executives should be treated as share trader rather than investors depends on the commercial character and intention of share dealings; frequency of transactions and use of borrowed funds alone do not convert shares into stock in trade, and shares remain capital assets unless the activity's attributes demonstrate a trading business. The commentary notes practical uncertainty and urges legislative clarification to reduce disputes.