| COURT: |
|
| CORAM: |
|
| SECTION(S): |
|
| GENRE: |
|
| CATCH WORDS: |
|
| COUNSEL: |
|
| DATE: |
(Date of pronouncement) |
| DATE: |
January 18, 2009 (Date of publication) |
| AY: |
|
| FILE: |
|
| CITATION: |
|
|
|
Tests to distinguish shares held as “stock-in-trade” and as “investments”
Where the assessee was a stock broker but it was consistently following the practice of holding some shaes as ‘stock in trade’ and other shares as ‘investments’ and the question arose whether the profits on the sale of shares held as investments constituted a capital gain or business profits, HELD:
(i) The assessee had been consistent in its practice of treating some shares as stock and others as a capital asset. While the shares held as capital asset were valued at cost in the accounts, the shares held as stock-in-trade were valued at the lower of cost or market value;
(ii) There is no bar on a stock broker holding shares as an investment. The mere fact that the assessee is an expert in share trading does not mean that he cannot hold shares as a capital asset. The magnitude of the transaction does not change the nature of the transaction.
Note: ACIT vs. Motilal Oswal was followed.
See Also: Circular No. 4/2007 dated 15.06.2007 and Taxation of Securities Transactions by CA Gautam Nayak
Related Posts:
- Kaybee Pvt Ltd vs. ITO (ITAT Mumbai) Section 92A(2) governs the operation of Section 92A(1) by controlling the definition of participation in management or capital or control by one of the enterprise in the other enterprise. If a form of participation in management, capital or control is not recognized by Section 92A(2), even if it ends up…
- Unnikrishnan V S vs. ITO (ITAT Mumbai) We find that so far as the ESOP benefit is concerned, while the income has arisen to the assessee in the current year, admittedly the related rights were granted to the assessee in 2007 and in consideration for the services which were rendered by the assessee prior to the rights…
- Karmic Labs Pvt. Ltd vs. ITO (ITAT Mumbai) Section 56 allows the assessees to adopt one of the methods of their choice. But, the AO held that the assessee should have adopted only one method for determining the value of the shares. In our opinion, it was beyond the jurisdiction of the AO to insist upon a particular…
- Volkswagen Finance Pvt Ltd vs. ITO (ITAT Mumbai) business models are constantly evolving, and as the rapid communication modes such as internet and social media have completely transformed the way businesses communicate, it is time that the law is seen in tandem with the ground realities of the business world, rather than in the strict confines of what…
- DCIT vs. JSW Limited (ITAT Mumbai) In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by…
- Medley Pharmaceuticals Ltd vs. CIT (ITAT Mumbai) We are of the considered view that the circulars which are issued by the CBDT must confirm to the tax laws and though are meant for the purpose of giving administrative relief or for clarifying the provisions of law, but the same cannot impose a burden on the assessee, leave…
Recent Comments