Taxation on Sale of Shares – Business Income or Capital Gain? – new CBDT circular
Over the past few years, there were lot of uncertainly and litigation around this point - whether the sale of shares is treated as Capital gain or Business Income.
Despite of various court rulings as well as CBDT clarifications, disputes continues to exist on the facts related to individual case since the taxpayers find it difficult to prove the intention in acquiring such shares/securities.
In a recent CBDT circular, tax payers are allowed to decide whether their gains/losses from sale of listed shares/securities should be treated as business income or as capital gains for tax purposes.
As the circular is binding on the Assessing officers, they cannot question the classification of the income by the assessee.
However, the circular has restricted application to listed shares and securitie...