Tests to determine whether shares gains assessable as STCG or business profits

CIT vs. Gopal Purohit (Supreme Court)

 

The Supreme Court vide order dated 15.11.2010 dismissed the Department’s Special Leave Petition against the judgment of the Bombay High Court in CIT vs. Gopal Purohit 228 CTR 582 (Bom) where it was held that:

 

(a) it was open to an assessee to maintain two separate portfolios, one relating to investment and another relating to business of dealing in shares,

 

(b) that a finding of fact had been arrived at by the Tribunal as regards the two distinct types of transactions namely, those by way of investment and those for the purposes of business,

 

(c) that there should be uniformity in treatment and consistency when facts and circumstances are identical particularly in the case of the assessee and

 

(d) that entries in books of account alone are not conclusive in determining the nature of income though they have a bearing.