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classification of Shares held of group companies

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26 May 2010 a Pvt Ltd. co. which is regd. as an NBFC is classifying its investment in Group companies which are all pvt ltd companies as Stock in trade, is this treatment correct?
this is more so when we know that shares of a Pvt co are not tradeable/transferable
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Rasesh

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Rasesh (Expert)
26 May 2010 Yes, the treatment is correct and followed as a matter of practice by most NBFC and also allowed by RBI.
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CMA. CS. Sanjay Gupta

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CMA. CS. Sanjay Gupta (Expert)
26 May 2010 IN MY OPINION THIS TREATMENT IS NOT CORRECT AND IT SHOULD BE SHOWN AS INVESTMENT.
SHOWING INVESTMENT IS MUCH BETTER. IF YOU SHOW IT AS STOCK-IN-TRADE THEN ANY INCOME ARISING IN FUTURE WILL BE TREATED AS BUSINESS INCOME.
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