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circular 6 / 2016 CBDT

Vineet (MBA) (77 Points)

21 August 2018

I'd like to understand if the following classification of "Stock in Trade" and "Capital Gain" is correct in view of circular 6/2016 of CBDT.

1. Assesse classifies gain from all shares sold before 12 months as business income.

2. Assesse classifies all owned shares older than twelve months as investments qualified for "Capital Gain".

Thank you.

Here is the relevant circular:

https://www.google.co.in/search?q=circular+6%2F2016+cbdt&oq=circular+6%2F2016+cbdt&aqs=chrome..69i57j0.10091j0j4&client=ms-android-xiaomi&sourceid=chrome-mobile&ie=UTF-8

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3 Replies

CA Bhavik Soni (867 Points)
Replied 21 August 2018

if shares is your stock in trade then its business income else capital gains

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Vineet (MBA) (77 Points)
Replied 21 August 2018

OK above what amount of trading in one year should one adopt this stock in Trade approach?

If you can give me an idea in terms of no of trades per year or total sales per year or total gain per year, it will help me.

Otherwise it is difficult to understand.

CA Bhavik Soni (867 Points)
Replied 21 August 2018

no universal principal in absolute terms can be laid down to decide the character of income from sale of shares and securities. circular itself clarifies that assessee has an option to consider it as investment or stock in trade and accordingly it will be treated in subsequent years. inshort once you opted as stock in trade, the same scenario will be for subsequent years and vice versa. hope you understood.

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