Theres good news for stock investors. ITAT has ruled that gains from stock transactions will now be classified as capital gains and be charged at 10%.
The ITAT bench, comprising accounting member Pramod Kumar and Judicial Member Sushma Chowla, held that volume of transactions should not be the basis of considering such income as business income. In this case Mr Rangwalla had earned short-term capital gains amounting to Rs 1.47 crore, which was claimed to be adjusted against long-term capital loss.
The assessee has also declared income from speculative gains, on account of sale and purchase of shares without the delivery of shares. The assessee had also claimed long-term capital loss of over Rs 1.02 crore.
The department declined to accept the income from investment as short-term capital gains, observing that given the frequency of transactions in shares, the assessee be treated as a dealer in shares and not an investor.
The ITAT held that there is no basis for treating the assessee as a trader in shares when his intention was to hold the shares in Indian companies as an investment and not as a stock in trade. The magnitude of transactions does not change the nature of transactions, the ITAT observed.