Clarification on speculation income form shares.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 July 2012 Dear Sir,
If an person has sold some shares without delivery, hence the same amounts to speculation but since he is liable to fine ITR2 therefore can you please advice where should the income/loss from such should be shown as there is no separate place for income from speculation. OR

If the person is liable to file ITR4 (due to some other business) but the above speculative transaction is not his business it is just an investment of his fund,hence it could not be classified as income form speculative business as per Sec 28.
Thus where should be the same reported while filing ITR4 for the Asst yr 2012-13.

Thanking you in advance

Yours Faithfully

Himanshu Binani
(M)-9674437168

Suresh Mittal

Suresh Mittal (Expert)
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10 July 2012 The income from eligible transactions from derivatives are taxable as business income and not speculation business. Refer Sec 43 of I.T.Act

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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10 July 2012 1. Income from intra day trading in shares is ALWAYS considered as speculation income.

2. Applicability of ITR depends on the source of income of the assessee.

You have to first determine all the sources of income and then decide the return form.

If you have speculation income, then ITR 4 will be filed even if the assessee does it have any other business.

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Querist : Anonymous

Querist : Anonymous (Querist)

10 July 2012 ITR4 is filed by person having business income and as per sec 28 all speculative transaction do not reflect that it is speculative business & in PGBP income from speculative business is only covered , hence SEC 28 doesnot become applicable therefore PGBP is not attracted.
Hence In my Point of view it income from speculation should be shown under other sources, if the shares are bought & sold as Investment

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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10 July 2012 Section 28 reads as under:

"The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession",—

(i) the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year"

Section 28 uses the word 'ANY'.

it does not say that only non-speculative business is covered u/s 28.

Even speculative business is covered u/s 28.

Section 28 does NOT make any distinction between speculative & non-speculative business.

Also read Section 72 & 73 which provide further evidence that speculation business is covered under the head Income from business or Profession.

Querist : Anonymous

Querist : Anonymous (Querist)

10 July 2012 Yes but I have done only some speculative transaction which does not amount to carrying on business, thus the income from such cannot be classified as income from speculative business, hence PGBP is not attracted.