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July 2026

Utilization of borrowed funds does not alter the character of investment transactions where other indicators of business activity are absent. In terms of para 3(b) of CBDT Circular No. 6/2016, the Assessing Officer is bound to accept the treatment adopted by the assessee where shares are held for more than 12 months and are consistently reflected as investments in the balance sheet and there is no allegation of bogus or sham transactions.

By Jagdish T Punjabi, Chartered Accountant Devendra Jain & Aditya Bhatt, Advocates
Reading Time 5 mins

30. TS-590-ITAT-2026 (Ahmedabad)

DCIT v. Kutir Navinchandra Patel

A.Y.: 2017-18

Date of Order: 23.4.2026

Sections: 28, 45

Utilization of borrowed funds does not alter the character of investment transactions where other indicators of business activity are absent.

In terms of para 3(b) of CBDT Circular No. 6/2016, the Assessing Officer is bound to accept the treatment adopted by the assessee where shares are held for more than 12 months and are consistently reflected as investments in the balance sheet and there is no allegation of bogus or sham transactions.

FACTS

The assessee, an individual engaged in the business of manufacturing corrugated boxes and trading in cloth filed his return of income for assessment year 2017-18 declaring total income of Rs. 8,62,20,910, which included Short Term Capital Gain (STCG) of Rs. 8,51,46,889 and exempt Long Term Capital Gain (LTCG) of Rs. 4,58,83,452 arising from sale of listed equity shares.

In the course of assessment proceedings, the Assessin

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