ITR
Officer treated total share sale value as income
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Facts
AIS reports the sale value of securities, not the profit. In a best judgment assessment the officer may start from the sale value if you have not shown the purchase cost.
Provisions and law
- Sec 144, Income-tax Act 1961 (now Sec 271)If you do not file a return or do not comply with notices under Sec 142(1) or 143(2), the officer can assess to the best of judgment after a show-cause notice giving you a date to be heard.
- Sec 112A, Income-tax Act 1961 (now Sec 198)Long-term gains on listed equity are taxed at a special rate above an exemption limit.
Analysis
If you sold shares for ₹15,00,000 that cost ₹14,20,000, the gain is ₹80,000, part long-term and part short-term. Give the broker's capital gains statement and contract notes, and compute tax at the right rates. This one reply can cut the proposed income from ₹15 lakh to under ₹1 lakh.
Conclusion
- Download the broker's capital gains statement for the year.
- Match each sale in AIS with its purchase.
- Compute short-term and long-term gains.
- Submit the computation with contract notes.
- Ask the officer to tax only the gain.
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Best judgment assessment, Sec 144 (now 271)
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