Question And Answer
Subject: Whether the investment in share capital market and transactions on regular basis , whether assessable as business income or capital gains?
Querist: Ayush Kumar Agrawal
Answered by:
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Date: May 15, 2021
Query asked by Ayush Kumar Agrawal

If the person carrying the whole sale business of any product and, during the year of tax computation, if the same person invested the surplus money in share capital market where the transactions done in all format including cash segment, derivative segment and commodity segment on regular basis.

So, how to treat the above transaction in books of account and how to make computation for the same.

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From our limited understanding of the background.

The Assessee is engaged in a whole sale trading activity. Any surplus generated will be treated as profits and the same will be charged to tax under the head Business Income. Further, with respect to the investments if the assessee is regularly buying and selling the income may be assessed as business income . It is the intention and method followed regularly will determine whether the surplus is assessable as capital gains or business income. Refer ,Rajputana Textiles (Agencies ) Ltd v. CIT ( 1961 ) 42 ITR 743 (SC) and also refer CIT v. Gopal Purohit (2011) 336 ITR 287 (Bom) (HC)

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