TaxTMI 
TaxTMI 
2016 (10) TMI 194
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....circumstances prevailing in the case and as per provisions & scheme of the Act it be held that, the short term capital gain derived on the sale of shares of Rs. 13,59,670/- should have been tax as short term capital gain only & not as income from business treated by the Authorities below. Just in proper relief be granted to the appellant on this score. 2. The appellant prays to be allowed to add, amend, modify, rectify, delete, & raise any grounds of appeal at the time of hearing." 3. The relevant facts, in brief, are that the assessee is a HUF deriving income from profit and gains of business/profession, short term capital gains, long term capital gains, dividend income and income from other sources. The assessee filed his return of i....
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.... the assessee are reflected in the Balance Sheet under the head 'investment' and not as 'current asset'. The treatment in this respect in the books is consistent having regard to the objects and the motive behind making such investments. In earlier years also, the assessee was holding shares and the same were reflected in the Balance Sheet under the head 'investments'. As on 31st March 2007, the total shares held in stock were amounting to Rs. 9,59,397/- i.e. in four scrips only. The Ld. AR emphasized that shares were taken by way of physical delivery and duly credited to the demat account of the assessee and held for reasonable/substantial period of time before those were disposed off. Similarly, when the shares were sold, the actual deliv....
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.... 111A and 112 as redundant. Particularly when it is not the business of the assessee to deal in shares and securities. The resultant short term capital gain declared include gains on several transactions where the shares were subscribed in initial public offering and sold after listing. This kind of activity cannot be seen to be a trading activity per se. The Ld. AR stressed that the shares were always acquired by way of investments and therefore the profits derived from the sale of such shares will have to be treated as 'long term/short term capital gain'. He also adverted our attention to a CBDT Circular No.6/2016 dated 29.02.2016 where the controversy in treating the purchase as capital asset or a trading asset has been somewhat addresse....
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....he other hand, has taken a view that the gain arising on impugned purchase and sale of shares is nothing but a business activity and therefore taxable under the head 'business income'. By doing so, the Revenue has sought to forfeit the concessional tax treatment available to the assessee where income is chargeable under the head 'capital gains'. 9. The controversy, in essence, is in a narrow compass i.e. whether the impugned transactions of purchase of shares and sale thereof tantamounts to an investment activity or a trading activity. In order to address the aforesaid controversy, the facts as discernible on record has been noted. It is seen that the assessee has declared the purchase of shares and holding thereof at the end of the year u....
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....oth. Determination of the character of a particular investment in shares or other securities, whether the same is in the nature of a capital asset or stock-in-trade, is essentially a fact-specific determination and has led to a lot of uncertainty and litigation in the past. 2. Over the years, the courts have laid down different parameters to distinguish the shares held as investments from the shares held as stock-in-trade. The Central Board of Direct Taxes ('CBDT) has also, through Instruction No. 1827, dated August 31, 1989 and Circular No.4 of 2007 dated June 15, 2007, summarized the said principles for guidance of the field formations. 3. Disputes, however, continue to exist on the application of these principles to the facts o....
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....d the taxpayers shall not be allowed to adopt a different/contrary stand in this regard in subsequent years; c) In all other cases, the nature of transaction (i.e. whether the same is in the nature of capital gain or business income) shall continue to be decided keeping in view the aforesaid Circulars issued by the CBDT. 4. It is, however, clarified that the above shall not apply in respect of such transactions in shares/securities where the genuineness of the transaction itself is questionable, such as bogus claims of Long Term Capital Gain / Short Term Capital Loss or any other sham transactions. 5. It is reiterated that the above principles have been formulated with the sole object of reducing litigation and maintaining consiste....