ROYAL BANK OF CANADA Vs. DIT

JUDGEMENT

(1.) THE applicant has raised the following three questions in this application for advance ruling under Section 245Q(1) of IT Act, 1961:

(2.) WHETHER profits/losses from transactions relating to purchase and sale of equity shares or other tradable securities on the Indian stock exchanges are in the nature of "Business Income" in the hands of the applicant under the provisions of the Act read with the Treaty?

(3.) THE applicant submits that the derivative transactions undertaken by it are part of its trading activity. The object in purchasing derivative is to resell the same at appropriate time and earn income. Sometimes, the applicant sells derivatives first and then purchases them. Further, the number and the amount relating to these transactions are substantial and carried out at regular frequency. The applicant is stated to have undertaken more than 1000 derivative transactions during the financial year 2008 -09. It is on the basis of these facts, the applicants claims that the profits earned/or loss suffered by it from derivative transactions should be characterized as business profits or loss.