Monday, 7 May 2012

Despite borrowing, gains on shares assessable as STCG & not business profits

Narendra Gehlaut vs. JCIT (ITAT Delhi)


The assessee earned gains from shares of which Rs. 7.61 crores was out of delivery-based transactions and offered as STCG while Rs. 4.26 crores was out of futures & options and offered as business profits. The AO & CIT (A) assessed the STCG as business profits on the ground that (a) there was no LTCG, (b) there was no dividends, (c) there were hundreds of transactions during the year, (d) the assesee had borrowed interest-bearing funds for purchase of shares & (e) the average holding period was 41 days. On appeal by the assessee, HELD allowing the appeal:

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