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| The Tax Publishers2022 TaxPub(DT) 4260 (Chen-Trib) INCOME TAX ACT, 1961
Section 14
Assessee was entitled to maintain separate portfolios i.e., one for investment and other one as trading assets. In the instant case, assessee classified the transaction as investments and held the shares for more than one year. Borrowed funds had been used to make these investments. Therefore, profit on sale of shares was to be treated as capital gains, instead of business income.
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Head of income - Business income or Capital gains - Profit on sale of shares -
Assessee-company engaged in share trading business sold shares of Shriram City Union Finance Ltd. (SCUFL) and City Union Bank Ltd. (CUBL) and offered resultant gain of Rs. 769.82 lakhs under the head 'capital gains'. AO taxed the same as business income. Held: Despite the fact that main object of assessee was dealing in shares and securities, it is well settled position that assessee was entitled to maintain separate portfolios i.e., one for investment and other one as trading assets. In the instant case, assessee classified the transaction as investments and held the shares for more than one year. Borrowed funds had been used to make these investments. Therefore, profit on sale of shares was to be treated as capital gains, instead of business income.
Distinguished:CIT v. Sutlej Cotton Mills Supply Agency Ltd. (1975) 100 ITR 706 (SC) : 1975 TaxPub(DT) 340 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2008-09
INCOME TAX ACT, 1961
Section 47(v)
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