Tax treatment of nri income
This query is : Resolved
Ca Siddharth Mehta
(Querist)
07 February 2012
Mr. Rakesh Ranjan is an NRI. He has invested in shares of a listed company who
has offered buy back of shares. Mr. Rakesh Ranjan avails the offer. He has invested in
the said company at different point of time; and finds that in some investments, he is
benefited if he doesn’t avail indexation and thus pays 10%; and in other investments in
the same company, he is benefited if he opts indexation and pays 20%. He files his
Return of Income accordingly. The Assessing Officer is rejecting his contention and
brings taxation of all securities @ 20% on following ground:
1. The Assessee has tried to reduce his liability; and in view of Mc Dowell’s case such tax planning is not allowed.
2. The Assessee is an NRI, and he has no option to go for 10% concessional taxation in case of Long Term Capital Gains.
3. Without prejudice, he feels that, the Assessee has cornered a number of shares of
this company on a regular basis; and thereby it is an activity of hording (storage) that renders the said activity as carrying on business.
Thus, he considers the income as business income; and protectively treats it as long
term capital gains chargeable @ 20%.
has offered buy back of shares. Mr. Rakesh Ranjan avails the offer. He has invested in
the said company at different point of time; and finds that in some investments, he is
benefited if he doesn’t avail indexation and thus pays 10%; and in other investments in
the same company, he is benefited if he opts indexation and pays 20%. He files his
Return of Income accordingly. The Assessing Officer is rejecting his contention and
brings taxation of all securities @ 20% on following ground:
1. The Assessee has tried to reduce his liability; and in view of Mc Dowell’s case such tax planning is not allowed.
2. The Assessee is an NRI, and he has no option to go for 10% concessional taxation in case of Long Term Capital Gains.
3. Without prejudice, he feels that, the Assessee has cornered a number of shares of
this company on a regular basis; and thereby it is an activity of hording (storage) that renders the said activity as carrying on business.
Thus, he considers the income as business income; and protectively treats it as long
term capital gains chargeable @ 20%.
Vishal D Shah
(Expert)
11 February 2012
A.O is incorrect. You need to justify that same was your investment activity. Also you may avail 10 20% as beneficial to you.
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