confusing in sepculative income and business income.

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

18 January 2011 DEAR MEMBERS,
THIS IS PARAMJIT SINGH. I HAVE HAVING CONFUSING IN SPECULATIVE BUSINESS INCOME AND NORMAL BUSINESS INCOME. PLS SEE THE BELOW MENTIONED:
THE ABC & cO. A PROPREITERY CONCERN HAVING BUSINSSS OF ACCOUNTING SERVICES. AND SIDE BY SIDE THE PRORIETOR DO SPECULATIVE TRADIGN FUTURES IN NSE FO AND MCX. THE THING IS THAT HE DO SAID SPECULATIVE TRANSACTIOS THROUGH HIS PROPRIETORSHIP CONCERN'S AND NOT IN HIS INDIVIDUAL NAME. SO THAT THE INCOME FORM THAT SPECULATIVE TRANSACTIONS ARE REFLECTED IN HIS ACCOUNT BOOKS OF PROPREITORY CONCERN.
SO FIRST OF ALL
1. IN IT RETURN HOW IT CAN BE BIFURCATED THE NORMAL BUSINESS INCONME AND SPECULATIVE BUSINESS INCOME.
2. CAN THE PROP. SET OFF HIS PREVIOUS YEAR LOSSES IN SPECULATIVE BUSINESS (WHICH HE HAVE DONE ON INDIVIDUAL NAME) FROM CURRENT SPECULATIVE INCOME WHICH HAS DONE IN PROP. CONCERN NAME.

PSL REPLY

WAITING FOR YOUR REPLY
THANKS
WITH REGRDS
PARAMJIT SINGH

Aditya Maheshwari

Aditya Maheshwari (Expert)
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18 January 2011 1. Bifurcate the expenses in relation to the two businesses or charge some proportion of expenses to the income based on turnover or any other better basis.
2. Yes

Querist : Anonymous

Querist : Anonymous (Querist)

18 January 2011 thanks aditya sir
is there be any aplicability of tax audit if gross receipts from normal business and speculative business in prop. concern exceeds 50 lakhs rs.
i.e normal business the gross receipts will be 150000/- (net profit 80000/-)
and from speculative business it will 49 lacs (net profit 47,50000/-)
so whether there be applicability of tax audit??

pls reply

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Querist : Anonymous

Querist : Anonymous (Querist)

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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18 January 2011 Yes , Tax Audit will be applicable, in this case.

Further, Paramjit Bhai, Nifty, FO, Commodity- MCX , all these transactions are
treated as non speculative transactions. You may set off normal business loss, if any. against the profits in FO, MCX etc.

Querist : Anonymous

Querist : Anonymous (Querist)

18 January 2011 paras sir, as per income tax, the income form trading which are done trhough broker in exchange.
so why it is not consider as speculative transactions??
psl clarify sir

Aditya Maheshwari

Aditya Maheshwari (Expert)
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18 January 2011 As per 43(5) trading done on a recognised stock exchange in India is non speculation business. Hence F & O in shares and currency futures done on NSE, BSE & MCX are non speculative.

Whereas intraday trading is speculative business.

In case of intraday trade and f & o turnover for purpose of Section 44AB is profit + loss and incase of delivery trade it will be sale value.

If they exceed Rs. 60 lakhs (including your normal business) then u are lisble for audit u/s 44AB.

Querist : Anonymous

Querist : Anonymous (Querist)

18 January 2011 thanks for your reply MR. Aditya sir.

sir there is one clarification i need to have in trading language the Turnoer is reffered as purchase value + sale value.

in ur line is the sale value for delivery trade is considered as turnoer, its ok i under stand the turnover of sale value is considered only in delivery trades.
but what about intraday and f&O and MCX turnovers/??
how it is reffered as profit + Loss???

lets clietn makes profit of 4500000 in 3 months and loss of rs 2500000 in two months, then what actually is his turnover???

also in normal course of business what would be considered gross receipts or net profit for examining the net turnover.

pls reply

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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18 January 2011 His turnover for the purpose of Tax audit would be Rs. 45 + 25 = 70 lacs and liable for tax audit.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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18 January 2011 Yes , rightly said by Mr Aditya, however, I may add that in this case monthly profit and loss is not considered. You have to take both profit and loss transactions in account considering loss as also positive. In monthly Profit and loss chances of set off are there.