Single Transaction of Buying and Selling of Shares can't be Business

The Income Tax Appellate Tribunal (ITAT) Chennai bench recently ruled that a single trade of sale and purchase of equities cannot be classified as a commercial activity to levied ITR Filing on a citizen. In this article, we shall discuss the latest notification relating to the single transaction of Buying and Selling of Shares can’t be Business.

Taxpayer’s Appeal to Tribunal Bench for considering single transaction of shares as Investment

It may be seen that the taxpayer acquired 1,25,000/- equity capital of ING Vysya Bank in January and February 2009 and that all of the shares were sold in September 2009. Consequently, the taxpayer reported the aforesaid transaction as a financial asset or investment on their ITR Filing for the relevant period because it was recorded in the accounts as an investment.

Assessment officer on considering single transaction of shares as Investment

The Assessing Officer denied the allegations, stating that because the holding period was only seven months, it had to be classified as business income and agreed by the Ld. CIT(A). The court panel, consisting of accountant G. Manjunatha and judicial panel member V. Durg Rao, noted that the valuer had acquired the ING Vysya Bank shares and then sold them. Given that the subject sold the shares in seven months, it cannot be said that he intended to classify the purchase and the shares as a business or investment.

Tribunal Bench clarifies Buying and Selling of Shares can’t be Business

“It is essential to look at the subject of valuation’s overall activity, that is, if the subject of valuation buys numerous shares, sells them, and then buys them once more if the operation is a continuous process of buying and selling, it can be assumed that the subject of valuation’s intention is stocks and is a business activity.” However, In this scenario, the evaluated individual was the only one that transacted. The reviewed bank’s conduct, namely the acquisition and sale of ING Vysya Bank shares, is, in our perspective, an investment rather than a commercial operation. As a result, we have canceled CIT (A order, ) and the assistant’s appeal has been permitted,’ said the Court.