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2016 (1) TMI 605 - AT - Income TaxAssessment of Capital gain arising on sale of shares as “Business income" - Held that:- As it cannot be said that the assessee’s intention at the time of purchase of shares was to hold them as investments. In our view, the assessee’s conduct and surrounding circumstances discussed above would show that the assessee has actually intended to deal in shares as a trader only. Hence, in our view, the Ld CIT(A) was justified in confirming the assessment of profit arising on sale of shares as business income of the assessee. Valuation of the closing stock of shares - cost or market value - Held that:- Though the assessee valued the shares “At cost” in the books, it claimed before the assessing officer that the valuation should be done at lower of cost or market value of shares. The said claim was rejected by both the tax authorities. We notice that the assessing officer has observed that the assessee has chosen to value its closing stock of shares at cost in its books of account and further the “Profits and gains from business” has to be arrived at in accordance with the method regularly followed by the assessee. The AO has further pointed out that the closing stock of the first year becomes opening stock of the succeding year and hence the ultimate tax effect would be nil. In our view, there is merit in the stand taken by the assessing officer. As observed by him the Profits and gains of business has to be arrived at the method of accounting regularly followed by the assessee. Since the assessee has chosen to value its closing stock of shares at Cost price, we are of the view that the tax authorities are justified in rejecting the claim of the assessee to value the shares at lower of cost or market value.
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