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2012 (10) TMI 15 - AT - Income TaxLoss on Forfeiture of Shares is assessed under Capital Gain or PGBP - Partial payment made for allotment of shares was disclosed under the head investment held in stock in trade – Held that:- As concluding from the fact the balance sheet assessee has disclosed the investment for allotment of shares being partly paid up under the head "investment in equity shares". Assessee did not produce any other materials to establish that these partly paid equity shares were held as stock in trade. There are no other materials before us to look beyond the statement of affairs. Therefore, nature of investment of the assessee and income or loss arising out of purchase and sale of the same has to be taxed under the head capital gains. Decides in favour of revenue Profit & Loss on sale of shares, is a business income or capital gain – Investments of shares were disclosed under the head investment - Held that:- As concluded from paper book filed by the appellant it appears that the share are held as stock in trade. Thus it is very clear that the objective of the assessee company in purchasing the shares was to trade in these shares and not for holding the same as investments. Therefore losses on sale of shares treat as business loss. Appeal decides in favour of assessee Transaction in F&O treat as business income or capital gain – Assessee’s ground that loss on sale of shares is assessable under the head capital gains, then profit and gains from the purchase/sales of the derivatives (F&O) of the shares must also be assessed under the head "capital gains" – Held that:- The intention of the assessee for procuring the asset has to be examined to determine whether the asset is to be treated as investment or stock- in- trade. It is very essential to understand the nature of transactions in dealing with derivative. Derivative itself is merely a contract between two or more parties for purchase/sale of securities by taking delivery or by settlement on certain pre-determined terms. Therefore, derivative by itself cannot be termed as an investment or stock in trade. The entire transactions of purchase/sale of securities/shares through derivatives and later on dealing with those shares/securities will determine whether an investment is made or stock-in-trade is procured. It entirely differ from case to case. - Decided against the assessee.
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