Legal Reference Library

In Principal CIT v. M.B. Finmart Pvt Ltd, the division bench of the Delhi High Court has held that the income from trading in shares/mutual funds must be treated as ‘Capital Gain’ if the Revenue has been treating the same as investment in the past years. Before the High Court, the department challenged the order of the first appellate authority and the Appellate Tribunal contending that trading in shares/mutual funds should be treated as capital gains. They contended that considering the consistent treatment of the above transactions in the books of accounts of the Assessee and the volume and frequency of such transactions would show that the said income is taxable as business income. The bench noticed the specific finding of the Tribunal that “from the details of purchase and sale and period of holding of shares, it is observed that the assessee has held 11 transactions of shares for more than 50 days and the balance were held for more than 100 days in total number of 30 transa...

In Anita. D. Kanjani Vs ACIT, the ITAT Mumbai held that The mere fact that possession was delivered later, would not detract from the fact that assessee (allottee) was conferred a right to hold the property on issuance of an allotment letter. The payment of balance amount and delivery of possession are consequential acts that relate back to and arise from the rights conferred by the allotment letter upon the assessee. Holding period should be computed from the date of issue of allotment If we do so, the holding period becomes more than 36 months and consequently, the property sold by the assessee would be long term capital asset in the hands of the assessee and the gain on sale of the same would be taxable in the hands of the assessee as Long Term Capital Gain. Article referred: http://taxguru.in/income-tax/property-holding-period-should-be-computed-from-allotment-letter-date.html#sthash.Z8TxegiO.dpuf

In Amritlal T. Shah vs. ITO, the ITAT Mumbai held that In valuing the shares of a privately held co, the “enterprise valuation” has to be taken by valuing even the assets held by subsidiaries of the Company. It is common for the sellers to charge a “controlling premium” for the sale of the shares. Such transfers to enable restructuring and re-aligning the shareholding pattern are genuine and bona fide. The alleged excess consideration for the sale of the shares cannot be treated as “unexplained income”

Humayun Suleman Merchant vs. CCIT The Income-Tax (I-T) Act provides for exemption from long-term capital gains where the sale proceeds of the original asset are invested in a new residential property. The Bombay high court, in a recent order, has held that such an exemption will be available only to the extent to which the amount has been actually utilized by the taxpayer, before the due date of filing his I-T return. If a taxpayer has only partly utilized proceeds of the long-term capital gains (LTCG) by making payments to the builder and has not deposited the balance unutilized amount in a specified bank account, then only the actual payments will be considered for computing capital gains exempt under Section 54F of the I-T Act, the HC held. The taxable component of LTCG is arrived at after taking into consideration the exemption available under Section 54F. This order will reduce the quantum that can be claimed as exempt from LTGC, consequently there will be a higher I-T payout ...

S. 50C: Land purchased by a builder with the knowledge that there are encumbrances on it and development is not feasible is a “capital asset” and not “stock-in-trade”. The gains on transfer of such land is assessable as capital gains and not as business profits. S. 50C applies to development agreements if the effect of the development agreement read with the conveyance deed is that the entire land with ownership rights are transferred (i) The assessee had purchased the title and interest in the land from the Rebello Family in 1994. The land so purchased by the assessee from the Rebello family in the year 1994 was subject to several encumbrances and defects which are also listed in the purchase agreement dated 15-08-1994 . The said land was also occupied by tenants/Kuls who are having claims in the said land. The said Rebello family earlier sold the land in the year 1979 to ‘Sweet Homes’ and also handed over possession to them. The said Sweet Homes made part payments under the said agr...