‘Initial intention’ of assessee to decide whether an activity amounts to ‘trading activity’ or ‘investment activity’

2 Comments

1. vswami says:

   To share MORE :

   Apprehensions as shared over a decade ago, soon after the CBDT came out with a set of instructions, followed up by fresh instructions, for guidance of and AO to follow seem to have proved not without substance, but turned out to be exactly true.

   See Posted earlier comment; and the cited published Article – (2006)153 TAXMAN 126.

   In that Article, it has been pinpointed to the effect, that, – according to the view consistently /uniformly taken/followed by courts is that for deciding the subject point of dispute- it is the intention of the assessee at the time of making the purchase and/or sale of the capital asset / stock-in-trade that should be taken as the essential criterion. For that matter, that it could not but be conceivably otherwise finds ample support in the very enactments for taxation of ‘capital gains’, specially dealing with instances /tax treatment of ‘conversion’ of a capital asst into stock-in-trade, or vice versa.

   The view the ITAT has taken in the instant case is no different but is the same; hence unimpeachable, leaving no scope whatsoever for any further agitation and procrastination of the dispute by the Revenue.

   KEY Note: In the cited Article, may be found covered, in a tone of appreciation, also the simplification of the law then made by the legislature to tax ‘capital gains’ on transfer of ‘equities’ at a preferential rate of 10%. For a discussion of the recent (2018) amendments of the governing scheme of provisions, of contextual relevance, see the ongoing debates in legal circles. As rightly canvassed for, and in one’s firm conviction, the referred development, dubiously regarded / claimed as a measure to ‘reform’, is tantamount to an unwarranted ‘DE-simplification’, frightfully done in haste; only lending unintended scope for a fresh spate of controversies and possible litigation, with no sane / laudable purpose to be eventually served .

     Reply

   March 16, 2018 at 7:22 am
2. vswami says:

   INSTANT

   The stance taken by the ao, and obstinately persisted in and pursued, by him, to say the least, appears to fly in the teeth of the detailed instructions, and supplementary ones, issued by the CBDT for proper guidance. For a related discussion, attempting to briefly explain the significance of, not just a few, but fifteen criteria, in all, requiring ao to go into and determine ‘the nature of activity’ of taxpayer, anyone may care to and go through the article published over a decade ago- (2006) 153 TAXMAN 126 !

     Reply

   March 15, 2018 at 8:09 pm