25 January 2010
If Loss from Trading in Shares is CAPITAL LOSS then it is allowed only set-off only with either LTCG or STCG.
If Shares loss treated as Speculation Loss then it is also allowed for set-off only with Income from Speculation business.
However, Business loss is allowed to set-off with any income except Salary. But if this is broght forward business loss, then it is allowed for set-off only with business income.
The loss from trading in shares is not capital gain loss from investment in shares.
It is the business of the company to trade in shares.
Please refer to the Explanation to section 73 where it is mentioned that: Where any part of the business of a company [other than a company whose gross total income consists mainly (51%) of income which is chargeable under the heads Interest on securities, Income from house property, Capital gains and Income from other sources], or a company the principal business of which is the business of banking or the granting of loans and advances) consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares.]
In our case, more than 51% of total income consists of Interest on FD, then why loss from trading in shares will be speculation business loss?
And
Can the loss from trading in shares be business income and hence be set off with Interest on FD.
CAclubindia
