“short term capital gains”
The decision most relied on for short term capital gains is CIT v. Ace Builders (P) Ltd. (281 ITR 210), cited in 88 judgments on BharatTax.
Leading authorities on short term capital gains
The deeming fiction in Section 50, which treats capital gains from depreciable assets as short-term, applies only for the purpose of computing capital gains under that section. For other provisions, such as set-off of losses under Section 74 or deductions under Section 54E/54EC, the asset's original character (long-term or short-term) is to be considered.
The 20% tax rate under Section 112 applies to capital gains arising from the transfer of a depreciable asset, even if it is deemed a short-term capital gain under Section 50, provided the asset was held for more than 36 months. The fiction created by Section 50 for treating such gains as short-term does not alter the long-term nature of the asset for applying the tax rate under Section 112.
The Supreme Court clarifies the distinction between income chargeable as capital gains and income taxable as business profits, guiding the assessment of whether a transaction constitutes a transfer of a capital asset or is in the nature of trade.
Surplus received on sale and purchase of shares should be treated as capital gains (short-term or long-term as applicable) and not as business income.
The period of holding a flat for capital gains purposes commences from the date of the allotment letter and the first installment payment, not from the later date of possession or registration.
The revenue is debarred from taking inconsistent stands on similar facts across different assessment years, adhering to the rule of consistency. Short-term capital gains are assessable under the head 'Capital Gains' only.
The intention of the assessee at the time of purchasing shares is a key criterion to determine capital gains treatment. This intention can be ascertained from how the purchase was treated in the assessee's books.
Each transaction can be considered a separate source of income, allowing taxpayers to choose between the Income-tax Act and a Double Taxation Avoidance Agreement (DTAA) for each transaction. Section 70(2) of the Act does not prescribe an order for setting off specific short-term capital losses against specific short-term capital gains, favouring the taxpayer in interpretation.
