Profit from sale of shares from investment portfolio taxable as Capital Gains and not as Business Income

Last updated: 30 June 2021

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The Income Tax Appellate Tribunal (ITAT) in Ahmedabad has ruled that profits from the sale of shares, when held as part of an investment portfolio with the intention of capital appreciation, should be taxed as 'short-term capital gains' (STCG). The tribunal found that the Assessing Officer's decision to treat these gains as business income was not sufficiently supported by evidence, particularly when the taxpayer had clearly distinguished between capital and trading transactions in their accounts.

Court :
ITAT, Ahmedabad

Brief :
The Hon'ble ITAT, Ahmedabad in Swatiben Anilbhai Shah v. DCIT [Income Tax Appeal Nos. 1513, 1514 and 1515/Ahd/2019 decided on January 29, 2021] held that where assessee purchased shares and recorded them in investment portfolio and it was justified that the intention of the assessee was to purchase the shares as capital asset, then income arising out of such shares was to be taxed as 'short term capital gain' ('STCG') under the head 'Capital Gains' and not as business income under the head 'Profit and Gains from Business or Profession' ('PGBP').

Citation :
Income Tax Appeal Nos. 1513, 1514 and 1515/Ahd/2019 decided on January 29, 2021

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1 Year PLAN - Rs.~~1999~~

1799

(Excl. of GST ₹323)

2 Years PLAN - Rs.~~3499~~

3149

(Excl. of GST ₹566)

BEST VALUE

3 Years PLAN - Rs.~~4999~~

4499

(Excl. of GST ₹809)

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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