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he Explanation to s.73 creates a fiction that the loss suffered by certain companies from the business of purchase & sale of shares shall be deemed to be speculation loss. The Explanation is not inconsistent with the object of introduction. The CBDT
The Tribunal has once again reiterated the principle that interest on fixed deposits kept as margin with banks is effectively connected with the business and would be taxable as business income. Furthermore, the Tribunal held that the direct expenses
Dissemination of informations, furnishing guidelines and suggesting plans of action aimed at uniformity and seamless quality in business dealings of participating group entities do not per se amount to making available to them technical knowledge and experience possessed by EMEIA to a substantial extent; There is no transfer of technical know-how in that pro
Mumbai bench of the Income-tax Appellate Tribunal held that the income from supply of information relating to various markets should be taxed as business profits under Article 7(3) of the India-Singapore tax treaty (tax treaty) and accordingly the expenses incurred for earning the income should be allowed as a deduction. Further, the Tribunal upheld the view that when the taxpayer chooses to be covered by provisions of an applicable tax treaty, the tax department cannot thrust provisions of the Income-tax Act, 1961 (‘the Act’) on the taxpayer unless those are more beneficial to the taxpayer.
The Mumbai Tribunal, following earlier judicial pronouncements and Circulars, has once again highlighted that the characterization of income from sale of shares as „capital gains or business income is a fact-based analysis. The decision of the Mumbai Tribunal in the case of Management Structure & Systems Pvt. Ltd is significant because in this case the taxpayer’s income from investments was substantially higher than the income earned from its main business activity of management consultancy.
Till AY 1996-97 unabsorbed depreciation could be set off against income under any head. From AY 1997-98 to 2001-2002 unabsorbed depreciation could be set off only against business income. From AY 2002-2003 onwards unabsorbed depreciation could again be set off against income under any head of income.
Any profits or gains arising from the transfer of a capital asset is taxable as ‘capital gains’ and is deemed to be the income of the tax payer in the financial year in which the transfer takes place. Similarly, income of every kind, which is not specifically taxed under any of the specified heads of income, like salary, house property, business income etc., and unless specifically exempt, is subject to tax under the head ‘income from other sources’.
The introduction of the Direct Taxes Code (DTC), which will replace the 50-year-old Income Tax Act, will make Foreign Institutional Investors (FIIs) liable to pay capital gains tax on their income from securities trade. All the FIIs will be subject to the capital gains tax after implementation of the Direct Taxes Code.
The assessee, a director and shareholder in a company engaged in share trading, returned income of Rs. 78,89,499 earned by her on transfer of shares as a “short-term capital gain”. The AO took the view that as there were voluminous transactions, the assessee was engaged in share trading and the income was assessable as “business income”. This was upheld by the CIT (A). On appeal, HELD dismissing the appeal:
The assessee, engaged in management consultancy, offered profits of Rs. 1.03 crores earned by it on sale of shares as long-term and short-term “capital gains” depending on the period of holding. The AO took the view that as the assessee was regularly dealing in shares throughout the year,
