Rule on consistency in securities transactions

I have utilised my savings and borrowed funds in purchase of securities including shares. In earlier years, I have shown capital gains and speculation income/ loss in share transactions. Please let me know tax implications. 

In respect of your transactions in securities including shares, you may have income taxable under the heads of capital gains or business income. Capital gains may be long term or short term, depending upon period of holding — in excess of 12 months or not — respectively. Non-delivery transactions would give rise to speculation income in any case.

One of the most litigation areas in transactions of securities is with respect to short term capital gains vis-a-vis business income. In such a litigation, one of the decisive criteria is whether one has utilised own funds or borrowed funds for the purpose of acquisition of securities including shares.

In case you have utilised own funds as well as borrowed funds, then it is in your interest to maintain as much segregation as possible with respect to securities acquired by own funds vis-a-vis by borrowed funds.

In respect of securities acquired with the help of borrowed funds, it would be a case of business income. In respect of securities acquired by own funds, it may be a case of capital gains subject to other criteria like frequency and volume of transactions, treatment in books of account, etc.

Futures and Options transactions governed by Securities Contracts (Regulation) Act, 1956, would be business transactions subject to conditions.

Although principle of res judicata is not applicable to assessment proceedings under revenue laws but at the same time, in respect of a view taken on facts of case in preceding assessment year(s) and  in subsequent year, facts remaining same and law not having changed, rule of consistency will help you in your claim for capital gains.

Can an electricity supply company charge me commercial tariff for my using the flat for profession?
Electricity supply company cannot charge you commercial tariff for use of your residential premises for professional purposes as the same does not tantamount commercial use.

The writer is a chartered accountant and can be contacted at ghiatarun@rediffmail.com