Thursday, December 8, 2011

Compilations of case law : SALE OF SHARES

INCOME – CHARGEABILITY AND COMPUTATION


SALE OF SHARES



Cumulative effect of all factors to be seen – It is Business income if in earlier years, sale of shares treated as business of assessee - Nothing on record to show that purchase of shares was for non-commercial purposes Purchase of shares not for getting controlling interest of company - Shares sold within a short period - Manner in which shares are shown in the Balance sheet is not conclusive


CIT Vs Karam Chand Thapar & Bros P. Ltd. (SC) 176 ITR 535


New Era Agencies Pvt. Ltd. Vs CIT (SC) 68 ITR 585


CIT Vs Amalgamations P. Ltd. (Mad) 108 ITR 895



Magnitude of purchase and sale of shares shows that it is business income


Raja Bahadur Visheshwara Singh & Ors. Vs CIT (SC) 41 ITR 685



Dealing in shares authorized by Article of Association of Company – Business income


Dalmia Cement ltd. Vs CIT (Pat) 12 ITR 50



Memorandum of Association of Company did not authorize purchase and sale of shares – Purchased shares to get controlling interest of company – Capital Gains arises on transfer


Kishan Prasad & Co. Ltd. Vs CIT (SC) 27 ITR 49



Purchase and sale of shares a solitary transaction – No dividend received – Capital gains arises on transfer


CIT Vs Jagarnath Prasad Chhawchharia (Pat) 176 ITR 217



Annual report of company shows investment in shares is for capital appreciation – Capital gains arises on transfer


India Nut Co. Ltd. Vs CIT (Ker) 39 ITR 234



Shares were never treated as stock-in-trade – held for earning dividend only – Transfer results in Capital Gains only


CIT Vs N.S.S. Investments (P.) Ltd. (Mad) 277 ITR 149


Vr. Kr. S. Firm Vs CIT (Mad) 61 ITR 661



It is not established that assessee was holding shares as stock-in-trade – Therefore shares held as investment – Dividend income is income from Other Sources. Holding of investments by itself is not business.


CIT Vs West Coast Electric Supplies Corporation Ltd. (Mad) 243 ITR 565.



Purchase & sale of shares in a Private Company within a short period – Adventure in the nature of trade.


V. Amirtham Ammal Vs CIT (Mad) 74 ITR 739


Burnside Investment & Holdings Ltd Vs CIT (ITAT, Mad) 61 ITD 501



Sale of shares of subsidiary company – Capital gains arises


CIT Vs Calcutta Discount Co. (P.) Ltd. ( Cal) 162 ITR 680



Shares purchased with borrowed funds – sale made not to liquidate debts and proceeds were kept in bank – Adventure in the nature of trade.


CIT Vs Sutlej Cotton Mills Supply Agency Ltd (SC) 100 ITR 706


Atlas Corporation Vs ITO (ITAT, Bom) 57 ITD 139


Neerja Birla Vs ACIT (ITAT, Mum) 66 ITD 148

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