Search Results For: shares


J.G.A. Shah Brokers P. Ltd vs. DCIT (ITAT Mumbai)

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DATE: March 16, 2016 (Date of pronouncement)
DATE: April 13, 2016 (Date of publication)
AY: 2009-10
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CITATION:
S. 43(5), Explanation to s. 73: Where the assessee is a dealer in shares, the entire business of share trading and derivatives should be treated as a composite business and aggregated before applying Explanation to
s. 73

Where the assessee is a dealer in shares, the entire business consists in sale purchase of shares, then, it should be treated as composite business. Also, assessee’s stand of treating the whole business as composite business has always been accepted by the revenue in earlier as well as subsequent years. Accordingly, whole of assessee’s business was treated as speculative and loss of current year was allowed to be set off against profits of the current year

Posted in All Judgements, Tribunal

In Re Aberdeen Claims Administration Inc (AAR)

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DATE: January 19, 2016 (Date of pronouncement)
DATE: January 26, 2016 (Date of publication)
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CITATION:
Amount received by a FII under a settlement for giving up right to sue is not assessable as either capital gains or as business profits. In principle, a FII is an "investor" and not a "trader" in stocks. On facts, applying Circular No. 4 of 2007, Aberdeen is an investor in shares

The Circular No.4 of 2007 issued by the CBDT quotes three principles laid down by this Authority in the case of Fidelity Group 288 ITR 641 in order to determine whether shares held are investment or stock-in-trade. First principle is how the shares were valued in the books of accounts, i.e., whether they were valued as stock-in-trade or held as investment. In this case the books of accounts show that the shares were held as investment. The second principle is to verify whether there are substantial transactions, their magnitude etc, maintenance of books of accounts and finding the ratio between purchases and sales. In this case the shares of Satyam were purchased, held as investment and sold only after the fraud became public. The third principle suggests that ordinarily purchases and sales of shares with the motive of realizing profit would lead to inference of trade/adventure in the nature of trade; where the object of the investment in shares of companies is to derive income by way of dividends etc, the transactions of purchases and sales of share would yield capital gains and not business profits. This principle also suggests that in this case the object of the investment is not to have business profit because the shares of Satyam were not being purchased and sold at regular interval. In the light of this even CBDT Circular No.4 of 2007 does not support the stand of Revenue that Aberdeen investors were engaged in trading business

Posted in AAR, All Judgements

Hema Hiren Dand vs. JCIT (ITAT Mumbai)

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DATE: February 18, 2015 (Date of pronouncement)
DATE: November 23, 2015 (Date of publication)
AY: 2008-09
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CITATION:
The object of introduction of Securities Transaction Tax (STT) was to end litigation on the issue of whether profit earned from delivery based sale of shares is capital gains or business profit. Merely because the assessee liquidates its investment within a short span of time, which had given better overall earning to the assessee, would not lead to the conclusion that the assessee had no intention to keep on the funds as investor in equity shares, but was actually intended to trade in shares

The idea behind introduction of security transaction tax is to end the litigation on the issue, whether the profit earned from delivery based sale of shares is capital gains for business profit. Thus, w.e.f. 01.10.2004; on the share transactions subjected to STT; concessional tax rate of 10% (which has been increased to 15% from AY 2009-10) are applicable in respect of STCG whereas no tax is chargeable in respect of LTCG. It is also noted that the CBDT vide its Circular no.4/2007, dated 15.06.2007 has also recognized possibility of two portfolios, i.e. one ‘Investment portfolio’ comprising of securities which are to be treated as capital assets and the other ‘Trading portfolio’ comprising of stock in trade which are to be treated as trading assets. In view of these facts, profit arose on shares in respect of delivery based transaction are liable to be taxed as capital gain and not as business income.

Posted in All Judgements, Tribunal

CIT vs. Datta Mahendra Shah (Bombay High Court)

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DATE: September 9, 2015 (Date of pronouncement)
DATE: September 16, 2015 (Date of publication)
AY: 2008-08
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CITATION:
Circumstances in which gains from sale of shares can be assessed as short-term capital gains and not as business profits explained

On consideration of the above facts, the CIT (A) and Tribunal rightly concluded that compliance on the part of the assessee in terms of Instruction No.1827 dated 31 August 1989 issued by the Central Board of Direct Taxes laying down the tests for distinguishing the shares held in stock-in-trade and shares held as an investment, the shares held by the assessee was investment and held the income to be treated as short term capital gains

Posted in All Judgements, High Court

Harsha L. Tahilramani vs. ACIT (ITAT Mumbai)

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DATE: October 17, 2014 (Date of pronouncement)
DATE: October 24, 2014 (Date of publication)
AY: 2007-08
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CITATION:
Law on the tests to distinguish whether gains on sale of shares is short-term or business profits explained

(i) The assessee wonders as to why should she be not allowed her claim of the delivery-based transactions as being not trade, which stands admitted by her qua non-delivery based transactions? However, that precisely defines the controversy which is to

Posted in All Judgements, Tribunal
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