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