Treatment of securities--Stock-in-trade or investment--Regarding

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..... 126), it was clarified that securities held by banks must be regarded as their stock-in-trade and the claim of loss, if debited in the books of account, should be given the same treatment as is normally given to the stock-in-trade. It was also clarified that the interest paid for broken-period on the purchase of securities must be regarded as revenue payment and allowed accordingly. 2. Consequen .....

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..... ijaya Bank Ltd. (187 ITR 541), the Supreme Court considered the issue whether, in a case where the assessee purchase securities at a price determined with reference to their actual value as well as the interest accrued thereon till the date of purchase, the entire price paid for them would be in the nature of capital outlay or whether the interest portion could be claimed as a revenue expenditure. .....

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..... the Assessing Officers should determine on the facts and circumstances of each case as to whether any particular security constitutes stock-in-trade or investment taking into account the guidelines issued by the Reserve Bank of India in this regard from time to time. Yours faithfully, (Sd.) G. Muthuramakrishnan, Director, Central Board of Direct Taxes.
Circular, Trade Notice, Public Notice .....

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