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Income Tax : In the instant case, all the shares have been bought by the assessee in the regular course of his business, employing common funds...
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In the instant case, all the shares have been bought by the assessee in the regular course of his business, employing common funds, depositing them in the same D-Mat account, and even through the same broker and infrastructure.
The intent and purport of the CBDT circular No.4/2007 dated 15.06.2007 is to demonstrate that a tax payer could have two portfolios, namely, an investment portfolio and a trading portfolio. In other words, the assessee could own shares for the purposes of investment and/or for the purposes of trading.
The AO held the assessee to be a trader in shares & assessed the gains as business profits on the ground that (a) there was high frequency & sale transactions, (b) there were instances where delivery was not taken and shares were sold within a short period,
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 Securities Exchange Board of India (Sebi) has said that ‘in-person’ verification of clients is a mandatory requirement for opening account by a depository participant (DP). This will hold good for opening trading account by a stock broker and vice versa, if the stock broker and DP is the same entity or if one of them is the holding or subsidiary company of the other, said Sebi in a note today.
The provisions of Explanation to section 73 do not distinguish between the transaction of trading in shares on actual delivery or without delivery basis. Admittedly the assessee does not fall under any of the exceptions provided in the Explanation and hence, the purchase and sale of shares traded during the year under consideration is in nature of speculation business within the meaning of proviso to section 73 of IT Act, 1961.
Section 254 of the Income-tax Act, 1961 – Appellate Tribunal – Powers of – Assessment year 1996-97 -Whether though Tribunal is not akin to a Court but functions discharged by it are similar to a Court, and, hence, in addition to its expressed statutory powers it has got inherent power to pass such orders as may be necessary for ends of justice – Held, yes –
The assessee is engaged in rendering Business & Management Consultancy and Marketing Services to its various clients against payment of professional fees. The assessee invested Rs 2,00,00,000/ – in 14,38,848.929 units of Sun F &C fund. The dividend of Rs.43,16,546. 70 received on 22.02.2001 was also reinvested in 4,09,151.252 units of the said fund as per the scheme of reinvestment plan.
THE Assessing Officer during the course of assessment proceedings observed that the assessee has claimed share trading loss of Rs.7,91,263/ -. From the various bills furnished by the assessee including the brokers notes, the Assessing Officer observed that the assessee has not taken physical delivery of shares purchased but only paid margin money. Since actual delivery of shares were not taken by the assessee the Assessing Officer treated the transactions as speculative transactions within the meaning of provisions of section 43(5) and treated the loss claimed by the assessee as speculative loss and allowed to be carried forward as per law.
