24 September 2008
whether transaction done in the future and option market of commodity for the same product of which the assessee is doing manufacturing can be treated as speculation business?
25 September 2008
In case the transaction done at commodity exchange is in the nature of a hedging transaction then the transaction will not fall in the ambit of speculative nature otherwise it is speculative.
25 September 2008
As per Sec 43(5) Speculative transaction means a transaction involving a contract for purchase and sale of commodities, including stocks and shares, which is periodically or ultimately settled other than by actual delivery or transfer of commodities or scrips.
25 September 2008
Transfer of Derivatives - Not a Speculative Transaction. Eligible transaction in respect of trading in derivatives carried out in a Recognized stock exchange.
The query is in connection with transactions at Commodity Exchange and your reply and opinion relates to Stock Exchange Transaction. Transactions at commodity Exchanges are speculative if it is not a hedging transaction.
27 September 2008
Dear Mr. Ahuja when the transaction will be treated as hedging transaction by AO. is there one to one co-relation between the future supply/sale contracts and forward trading is necessary?
29 September 2008
A transaction is in the nature of hedging when it is entered to secure against the future losses on account of price fluctuations. In case the transaction is backed by the Stock in hand of the relevant commodity or a purchase order has been placed for the same and the F&O transaction has been entered with an intention to hedge the loss on account of price fluctuations, then it is termed as Hedging.
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