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2012 (4) TMI 270 - AT - Income TaxDetermination of the appropriate head of income for taxing the surplus realized on sale of shares - business income or capital gain – Held that:- AY 2006-07 - an investor would not enter into purchase and sale transactions of shares of 52 companies and units of 10 mutual funds in a single year. The transactions are numerous and period of holding is small - undertakes such large number of transactions keeping the market conditions in view would obviously assume the character of a dealer and not investor - surplus arising from the transactions fall in head “profits and gains of business” - against assessee. AY 2007-08 and 2008-09– Assessee stated that the LTCG was claimed to be not includible in the total income by dint of provision contained in section 10(36), lower rate of tax was claimed to be applicable in respect of STCG - assessee has also shown STCG in respect of 74,000 bonus and the assessee also sold sub-divided shares and earned profit on it – Held that:- bonus shares would normally be deemed to be distributed by the company as capital and the shareholders receive the shares as capital - profit on sale of bonus shares would be in the nature of capital gain to profit which has to be classified as STCG - bonus shares of Kotak Bank Ltd. and Unitech Ltd. are held to be on capital account and all other transactions are held to be on business account.
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