Sole transaction in shares liable for Capital Gains – ITAT

Nagindas P. Sheth (HUF), Mumbai; (2) ACIT, Mumbai vs (1) ACIT, Mumbai; (2) Nagindas P. Sheth (HUF), Mumbai

CLR View: ITAT has held that the Sole transaction in shares liable for Capital Gains  and will not be liable to be taxed under Business and Profession.


Capital Gains -Assessee (HUF) earned income from business, capital gains and other sources and declared short term capital gains in respect of the shares sold within a span of 12 months – Assessing Officer (AO) assessed income of the assessee as business profits on the ground that that the intention of the assessee was only to trade in shares to make profit as assessee made 158 share transactions during the previous year – On appeal, Commissioner held that short term profit on sale of shares held for more than 30 days should be treated as income from business – Hence, the instant appeal – Whether profit arising out of purchase and sale of shares was assessable to tax under the head ‘capital gains’ or ‘business income’? – Held, merely because assessee transacted in 158 shares that should not be taken as a sole criterion to come to the conclusion that assessee was a trader in shares – Gains earned by the assessee deserve to be assessed as capital gains because the assessee was holding the shares in its books as an investor, shares were acquired out of own funds and family funds and not through borrowings and there was not a single instance where the assessee had squared-up transactions on the same day without taking delivery of the shares – Appeal allowed.

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