Shares transactions with loan money

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This query is : Resolved

Vikas Agarwal (Querist)

12 June 2012 I have taken a loan from my mother and invested the proceeds in shares and also did future and options business from that money...I am not paying any interest to my mother for the loan amt...is it ok to include gains or losses from shares in my tax return and not my mothers?

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)

12 June 2012 Dear Mr. Vikas,

As per section 61 of IT Act, 1961- All income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income-tax as the income of the transferor and shall be included in his total income.

Hence, if the amount you received from your mother, is revocable then it wil be taxable in her hands.
Otherwise, take the amount as gift from her and invest it in the business then it will be taxable in your hands.
thanks.

Vikas Agarwal

Vikas Agarwal (Querist)

12 June 2012 Thank u amit sir....but in this case,isnt it true that investing in shares is something that involves personal skill and hence should be included in my total income...also this year I have loss from short term transactions as also future and options,should it still form part of my mother's return and not mine...
what if I pay her interest on the loan amount?pls guide

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)

12 June 2012 For that professional fees can be paid but income will be taxable only in the hands of the person who has invested the money.
Obviously, if you pay the interest then it will be taxble in your hands only.

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