April 2019

Section 68 Cash credits Capital gain or business income Profits from sale of shares Genuineness of purchase accepted by Department Profits from sale cannot be treated as unexplained cash credits Profit from sale of shares to be taxed as short/long term capital gains

K. B. Bhujle
Advocate

3.       Principal CIT vs. Ramniwas Ramjivan Kasat; 410 ITR 540 (Guj):Date of order: 5th June, 2017 A. Y.: 2006-07

 

Section 68 Cash credits Capital gain or business income Profits from sale of shares Genuineness of purchase accepted by Department Profits from sale cannot be treated as unexplained cash credits Profit from sale of shares to be taxed as short/long term capital gains

 

For the A. Y. 2006-07, the Assessing Officer made additions to the income of the assessee u/s. 68 of the Income-tax Act, 1961 on the ground that the assessee had sold certain shares and the purchasers were found to be bogus. The second issue was  in respect of the treatment of the income earned by the assesse on the sale of shares. The assesse contended that the shares were in the nature of his investment and the income earned to be treated as long term capital gains. The Department contended that looking to the pattern of holding the shares, the frequency of transactions and other relevant considerations, the assessee was trading in shares and the income was to be taxed as business income.

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