The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench consisting of Pramod Kumar, Vice President and Siddhartha Nautiyal, Judicial Member held that to consider share transaction as business income “the quantum of profit made from sale higher than dividend earned by taxpayers.
The assessee, Shri Jitendra Manilal Malkan is an advocate by profession and offers income for taxation mainly under the head income from profession. During the year and the consideration, the assessee had indulged in share trading activity and incurred loss of Rs 12,96,828/- which has been set-off against his income from profession by treating the same as business loss. However, the Assessing Officer (AO) treated the said loss as short-term capital loss on the ground that the shares were held as investment as the assessee was not in the business of purchase and sale of shares and disallowed the claim of set-off of said loss against income from profession. While disallowing the said loss, the AO allowed the assessee to carry forward the short-term capital loss of Rs12, 96, 828/-. The assessee filed appeal before Commissioner of Income Tax (CIT), against the aforesaid addition. The assessee relied upon Circular no. 4/2007, wherein the Board has directed the Department consider the sale of shares held for less than one year as business income. The assessee submitted that he generated income from share trading business and also incurred certain expenses in relation to the same. Accordingly, in view of the above Circular, the assessee should be allowed the benefit of set off of short-term capital loss against professional income.
The Tribunal observed “We hold that the Learned CIT (A) has erred in facts and law in holding that the loss from sale of shares was short-term capital losses and hence not eligible for set of against income from profession of the assessee.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
