Circular No. 610

Clarification regarding treatment of securities as stock-in-trade or investment

What this is

Circular No. 610 was issued by the Central Board of Direct Taxes on 31 July 1991. Its subject is Clarification regarding treatment of securities as stock-in-trade or investment.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Withdraws Circular No. 599, dated 24-4-1991 of the Central Board of Direct Taxes, which had dealt with the treatment of securities as stock-in-trade or as investment. The withdrawal follows the judgment of the Supreme Court in Vijaya Bank Ltd. v. CIT [1991] 187 ITR 541, which the circular names.

Why it was issued

The Supreme Court's judgment in the case named made the earlier circular untenable, and the Board withdrew it.

Who it reaches

Banks and other assessees holding securities
Assessees who relied on Circular No. 599 for their securities classification
Assessing Officers considering whether securities are stock-in-trade or investment

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

Clarification regarding treatment of securities as stock-in-trade or investment
Consequent to the judgment of the Supreme Court in the case of Vijaya Bank Ltd. v. CIT [1991] 187 ITR 541, Circular No. 599, dated 24-4-1991 of the Central Board of Direct Taxes, New Delhi may be treated as withdrawn.
Circular : No. 610, dated 31-7-1991.

What to watch

The circular does nothing beyond withdrawing Circular No. 599; it lays down no rule of its own on how securities are to be classified.
It does not say from what date the withdrawal takes effect.
On the substance one has to go to the judgment the Board names, not to this text.

Where you meet it

In an assessment or appeal where an assessee cites Circular No. 599 on the character of its securities holding.

← Circular No. 611 · Circular No. 609 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.