turnover of intraday

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Querist : Anonymous

Querist : Anonymous (Querist)

29 July 2010 Whether gross turnover of intraday is to be considered for TAX AUDIT turnover limit ie. Rs. 40 lacs for AY 2010.11. Further whether such turnover be shown while giving information in Annual Information Report if the amount of purchase of shares of one company exceeds Rs. 100000/- in a year.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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31 July 2010 THE TURNOVER OR GROSS RECEIPTS IN RESPECT OF TRANSACTION IN SHARES, SECURITIES AND DERIVATIVES MAY BE DETERMINED IN THE FOLLOWING MANNER.

(a) SPECULATIVE TRANSACTION: A speculative transaction means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scripts. Thus, in a speculative transaction, the contract for sale or purchase which is entered into is not completed by giving or receiving delivery so as to result in the sale as per value of contract note. The contract is settled otherwise and squared up by paying out the difference which may be positive or negative. As such, in such transaction the difference amount is 'turnover'. In the case of an assessee doing speculative transactions there can be both positive and negative difference arising by settlement of various such contracts during the year. Each transaction resulting into whether a positive or negative difference is an independent transaction. Further, amount paid on amount of negative difference paid is not related to the amount received on account of positive difference. In such transactions though the contract notes are issued for full value of the purchased or sold asset the entries in the books of account are made only for the differences. Accordingly, the aggregate of both positive and negative differences is to be considered as the turnover of such transaction for determining the liability to audit vide section 44 AB.

(b) Derivatives, futures and options: Such transactions are completed without the delivery of shares or securities. These are also squared up by payment of differences. The contract notes are issued for the full value of the asset purchased or sole but entries in the books of account are made only for the differences. The transactions may be squared up any time on or before the striking date. The buyer of the option pays the premia. The turnover in such types of transactions is to be determined as follows:
i. The total of favourable and unfavourable differences shall be taken as turnover.

ii. Premium received on sale of options is also to be included in turnover.

iii. In respect of any reverse trades entered, the difference thereon, should also from part of the turnover.

(c) Delivery based transactions: Where the transaction for the purchase or sale of any commodity including stocks and shares is delivery based whether intended or by default, the total value of the sale is to be considered as turnover.

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Querist : Anonymous

Querist : Anonymous (Querist)

02 August 2010 Thanks sanjay, Please enlighten me on the later part of my query i.e. whether such turnover be shown while giving information in Annual Information Report if the amount of purchase of shares of one company exceeds Rs. 100000/- in a year.

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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06 August 2010 No the same needs not be shown in AIR as the AIR column is for share purchased from a company via IPO routeand their likes and not otherwise