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Receipt from Sale of Shares by a Share Broker is Taxable as ‘Capital Gains

In ITO v. Kalpana Khandelwal, the Mumbai ITAT held that the amount received by a Share Broker is taxable as capital gain under the provisions of the Income Tax Act.

The decision was based on the well settled proposition that the question as to whether a person has acted as a trader or as an investor in respect of share transactions, has to be decided on the basis of various factors listed out by the CBDT and Hon’ble Courts. While dismissing the departmental appeal, the bench noticed that the intention of the party is relevant in such cases.

Assessee, who is registered as sub-broker with SEBI, claimed that the receipt out of sale of shares is asseaable to tax under the head “capital gain”. AO, however, completed assessment by holding that the same constitutes business income of the assessee. The first appellate authority reversed the decision on appeal.

Aggrieved by the order of the CIT(A), Revenue preferred an appeal before the Tribunal contending that the assessee has been indulging in the activities of purchase and sale of shares as a trader. Assessee, on the other hand, contended that she has acted as an Investor only in these share transactions.

Article referred: http://www.taxscan.in/receipt-sale-shares-share-broker-taxable-capital-gains-itat-mumbai/8284/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Taxscan+%28Top+Stories+%E2%80%93+Taxscan+%7C+Simplifying+Tax+Laws%29

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