Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

Shri Suresh Babulal Shah (HUF) , C/o Khandelwal Jain and Associates Versus The Dy. Commissioner of Income Tax, Circle 1 (1) , Pune

Transaction of shares - whether the impugned transactions of purchase of shares and sale thereof tantamounts to an investment activity or a trading activity? - Held that:- The CBDT Circular No.6/2016 dated 29.02.2016 clarifies that once a particular stands has been taken by the assessee to such purchases in a particular assessment year it shall remain applicable in subsequent assessment years also and the taxpayers shall not be allowed to adopt divergent stand in different assessment years. Clea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r were also sold and gain arising therefrom formed part of the impugned capital gains arising in this year. We, thus, find no reason to impugne the declared intention of the assessee that the share were acquired as capital asset. In the aforesaid view of the matter, we find considerable merit in the arguments raised on behalf of the assessee. Hence, in our view, the assessee is entitled to treat the gains arising on purchase and sale of shares in the impugned assessment year as short term capita .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

43(3) of the Income-tax Act, 1961 (in short the Act ). 2. In this appeal, the assessee has raised the following Grounds of Appeal :- 1. On facts and 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 ₹ 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as selected for scrutiny and assessment order under section 143(3) of the Act was passed assessing the total income at the same amount. However, the Assessing Officer treated the income declared under the head short term capital gains of ₹ 13,59,669/- as business income . The Assessing Officer noted that in view of the volume, frequency, continuity and regularity of the purchase and sale transactions of shares, the assessee was not justified in treating the gains arising on sale of shares .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e the Tribunal. 6. The Ld. Authorized Representative (AR) for the assessee Shri R. G. Nahar submitted that the Assessing Officer has wrongly held the purchase and sale of shares by the assessee HUF to be a trading or business activity as against the investment activity claimed by the assessee. The Ld. AR referred to the submissions made before the Assessing Officer and submitted that various shares held by the assessee are reflected in the Balance Sheet under the head investment and not as curre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

count of the assessee and held for reasonable/substantial period of time before those were disposed off. Similarly, when the shares were sold, the actual delivery thereof was given. He pointed out that the assessee has not incurred any expenditure on stock which is ordinarily required in a systematic or organized course of activity. The investment made in the various shares is limited to just 16 scrips amounting to ₹ 3,11,831/- as on 31st March, 2008. He next pointed out that Security Tran .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

securities listed in recognized stock exchange vide section 2(42A) as well as long term capital assets as defined in section 2(29A) of the Act. Similarly, section 111A and 112 lays down the procedure for computation of tax short term capital gain and long term capital gain respectively. The Ld. AR observed that capital gain of ₹ 13,59,669/- is meager and was claimed in accordance with provisions of section 111A of the Act. The assessee satisfies all the conditions stated in the said secti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 addressed. He referred to a decision of the Co-ordinate Bench of the Tribunal in the case of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

res bears trappings of business or adventure in the nature of trade or commerce, etc. and thus gain arising therefore is required to be taxed as business transaction as per section 2(13) of the Act. He, therefore, pleaded that no interference with the order of the CIT(A) is called for. 8. We have carefully considered the rival submissions and orders of the authorities below. The assessee has declared gain arising on purchase and sale of shares to the tune of ₹ 13,59,669/- as short term cap .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e 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 controve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

investments . It is also borne out from the record that several transactions giving rise to gain are acquired by way of initial public offering which were re-sold after the same were listed in the stock exchange. We also notice that the assessee was holding barely 16 scrips at the end of the financial year 2007-08 relevant to assessment year 2008-09. This kind of factual data does not support the case of the Revenue that the assessee was indulging in any sort of systematic or organized business .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

al assets subject to certain exceptions. As regards shares and other securities, the same can be held either as capital assets or stock-in-trade/ trading assets or both. 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 param .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing such shares/securities. In this background, while recognizing that no universal principal in absolute terms can be laid down to decide the character of income from sale of shares and securities (i.e. whether the same is in the nature of capital gain or business income), CBDT realizing that major part of shares/securities transactions takes place in respect of the listed ones and with a view to reduce litigation and uncertainty in the matter, in partial modification to the aforesaid Circulars .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. However, this stand, once taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent Assessment Years also and the taxpayers shall not be allowed to adopt a different/contrary stand in this regard in subseq .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

actions. 5. It is reiterated that the above principles have been formulated with the sole object of reducing litigation and maintaining consistency in approach on the issue of treatment of income derived from transfer of shares and securities. All the relevant provisions of the Act shall continue to apply on the transactions involving transfer of shares and securities. 12. With a view to dilute controversy continuously cropping up on the subject, the CBDT has unraveled the guidelines in this reg .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

Forum: Input tax credit

Forum: Cess paid instead of SGST

Forum: Excise duty credit on finished stock at additional place of business.

Circular: Amendments in Hand Book of Procedures 2015-20 –reg.

News: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice

Highlight: Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.

Forum: GST rates on mobile recharge business

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Forum: import purchase

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $

Forum: 3B mistake

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version