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ITO vs. Ms. Vanaja Sunder Iyer - (Income Tax Appellate Tribunal) (27 Nov 2017)

Profits on sale of shares were liable to taxed under the head capital gains


Direct Taxation

This appeal has been filed by the Revenue for challenging the order of CIT(A) for treating the profit earned by the Assessee from the sale of shares under the head of capital gains.

As per the facts, the Assessing Officer, after analyzing the transactions made by the Assessee of purchase and sale of shares, observed that the period of holding of shares indicate that the motive of the transaction is to earn profit and not capital appreciation. Thus, the profit earned from the transaction is liable to be treated as business income. However, on appeal, CIT(A) decided the matter in the favour of the Assessee and allowed the amount of profit to be treated as capital gain. Being aggrieved, Revenue approached the present Tribunal.

The present bench found that the CIT(A) after applying proposition of law laid down by Bombay High Court in the case of Gopal Purohit and applying CBDT Circular No.4/2007 dated 15/06/2007 held that profits on sale of shares were liable to taxed under the head capital gains and dismissed the appeal after ruling that profit declared by the Assessee was correctly treated by CIT (A) as capital gain liable to be taxed under the head Capital Gains.


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