Future & option income/loss

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 July 2012 act says
Definitions of certain terms relevant to income from profits and gains of business or profession

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 scrips:

Provided that for the purposes of this clause—

(a) a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him; or

(b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or

(c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; 34[or]

34[(d) an eligible transaction in respect of trading in derivatives referred to in clause 35[(ac)] of section 236 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange;]

shall not be deemed to be a speculative transaction.

look at point (b) & (d)..... since as an investor I hold shares & transaction is done electronically so does it means it is not an speculative income hence not income from business or profession

if, anywhere else also in the act it is mention plz share

Amol S Joglekar

Amol S Joglekar (Expert)
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23 August 2012 innyour case, if you are taking the position in FNO to guard the loss of the value of your existing PORTFOLIO, then it will be a NON speculative, otherwise speculative