On merger all investments in mutual funds are transferred to assessee at book value. Prior to amalgamation such mutual funds under head Investments. Tribunal held that the assessee has shown the Mutual funds as investment in books and it never treated same as stock-in-trade. Accordingly profit from sale of such mutual funds was to be taxed as capital gain and not as business income. (AY. 2007-08, 2008-09)
S C Johnson Products (P.) Ltd. v. DCIT (2019) 175 ITD 477 (Delhi)(Trib.)
S. 45 : Capital gains-Business income-Merger investments in mutual funds–Liable to be assessed as capital gains and not as business income. [S. 28(i)]