SPECULATION TRANSACTION SEC. 43(5)

This query is : Resolved

CA Sanjay Baheti (Querist)
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25 August 2010 Dear Members , As per section 43(5) , speculative transaction measns a transaction in which a contract for the purchase of sale of shares or stocks , is ultimately settled , otherwise than by the actual delivery. Query : I have purchased 500 shares of reliance on 16.08.2010 th. stock exchange and sold the same on 17.08.2010 also th. stock exchange. Whether, that transactions would come under speculative transactions or under the delivery base transactions. ITO is assessing that type of transactions as delivery base transactions because as per broker note sattlement no. is different and date of sattlement is also not same.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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25 August 2010 No it will not be considered as speculative as it is evident from the contract note as charges are levied as delivery transactions and not intra day.

CA Kalpesh Gokani

CA Kalpesh Gokani (Expert)
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25 August 2010 If shares were credited and debited in Demat statement for purchase and sale respectively, then transaction should be considered as delivery based otherwise spculative transaction. Normally for taking delivery it takes 2 or 3 days. so in this case this might be speculative transaction.

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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25 August 2010 I do not disagree with the view stated by Kalpesh but in cases where transactions are huge for every transactions we cannot check the same with the demat statement. Also there is a problem that the shares which are in T group are on which settlement takes place on the same day itself so how can we identify such thing. Hence the above statement.

CA Kalpesh Gokani

CA Kalpesh Gokani (Expert)
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25 August 2010 Yes..your explaination is also correct aditya....but AO mostly relies on demat statements..so this can be used as best proof for delivery based transactions. Tracing a transaction in demate state. is not a big deal whatever be the no and size of transactions as it shows script and date wise.