Shares can be hold as both investment and stock-in-trade

Dipakbhai Harishchandra Shah Vs ITO (ITAT Ahmedabad)

ITAT Ahmedabad held that as per CBDT circular no.4/2007 dated 15.6.2007 and 6/2016 dated 29-2-2016, person can hold shares as both investment and stock-in-trade. Accordingly, income will be taxable based on the type in which share is hold.

Facts- During the assessment proceedings, AO noted that the assessee has shown LTCG on sale of shares amounting to Rs. 1,32,859/-. He further noted that the assessee had been reflecting share transaction both as business and as LTCG. Rejecting these two stands taken by the assessee, he brought long term capital returned by the assessee to tax as business income of the assessee.

CIT(A) rejected the contentions of the assessee stating that the assessee had not filed any bifurcation of shares held as stock-in-trade and as investment. Being aggrieved, the present appeal is filed.

Conclusion- CBDT vide circular No.4/2007 dated 15.6.2007 and Circular No.6/2016 dated 29-2-2016 had clarified that it was possible for one person to hold shares as investment and as stock-in-trade also; that certain guidelines has been brought with respect to the same which the assessee had followed.

Please become a Premium member. If you are already a Premium member, login here to access the full content.