Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: VAT RATES :: TDS :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company :: form 3cd :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: empanelment :: list of goods taxed at 4% :: cpt
« From the Courts »
  Dr. Gautam Sen vs. CCIT (Bombay High Court)
 Dr. Gautam Sen vs. CCIT (Bombay High Court)
 DCIT vs. Shivshankar R. Sharma (ITAT Mumbai)
 ACIT vs. Jawaharlal Agicha (ITAT Mumbai)
 CIT vs. M/s. D. Chetan & Co (Bombay High Court)
 Makes further amendments to Notification no. 157/90-Customs dated 28th March, 1990 regarding temporary admission under the ATA Carnet
 Appointment of Common Adjudicating Authority by DGRI - 2/2016-Customs
 ransfers Of Hon’ble Members Of The ITAT (September 2016)
 M. G. Contractors Pvt. Ltd vs. DCIT (ITAT Delhi)
 Haryana State Road & Bridges Development Corporation Ltd vs. CIT (P&H High Court)
 Dharamshibhai Sonani vs. DCIT (ITAT Ahmedabad)

Pay only 15% tax on short-term gains, now
July, 18th 2011

There seems to be a dim ray of hope for scores of investors who were asked to pay a higher tax for selling shares within 30 days of purchase. The Income Tax Appellate Tribunal (ITAT) has ruled that profits from the sale of shares held for less than 30 days are eligible to be treated as short-term capital gains, on which 15% tax has to be paid.

Tax officials demanded a higher tax of over 30% on the ground that since shares were sold before 30 days from the date of purchase, such gains should be considered as business income and not short-term capital gains. Since tax rules do not spell out the duration of holding and frequency of securities trades for tax treatment, tax officials often use their discretion to arrive at a claim. This has been a source of endless disputes between investors and the tax department.

The 15 June ruling by ITAT in Mumbai is the latest in a series of judicial and quasi-judicial decisions on what constitutes short-term capital gains and business income. The ITAT decision in the case of Hitesh Satishchandra Doshi followed two earlier decisions, where the ITAT drew a 30-day mark to distinguish between business income and short-term capital gains.

The Mumbai ITAT, however, held that the statute is clear only as far as the distinction between long-term and short-term capital gains is concerned. For long-term capital gains, shares have to be held for at least 12 months, and the profit from shares held for less than 12 months will be taxed as short-term capital gains.

There is no tax on long-term capital gains. The ITAT also observed that the law does not lay down a 30-day mark to distinguish between business income and short-term capital gains. It pointed to the parameters laid down by the Supreme Court for making the distinction between investment and trading in shares.

Factors such as intention of the assessee at the time of buying shares, whether the assessee borrowed money to purchase the shares and paid interest, the frequency of such purchases and disposal in that particular item, whether the purchase and sale is for realising profit or purchases are made for retention and appreciation in its value, and how the value of items has been taken in the balance sheet, are critical in determining whether a gain is business income or a short-term capital gain.

Therefore, no single factor can be said to be decisive in determining whether the nature of the transaction is trading activity or investment, the ITAT held. Each case needs to be decided on the basis of the facts of the case. Therefore, treating a transaction as investment when the holding period is more than 30 days and treating the income as business income if the holding period is less than 30 days is not correct, the ITAT observed.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
SEO Company Search Engine Optimization Company US SEO Local SEO Company Website SEO Company Alabama SEO Company Alaska SEO Company Arizona SEO Company Arkansas SEO Company California SEO Company Colorado SEO Company Connecticut SEO Company Delawa

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions