CA CMA CS VIRAG SHAH (9773395720) (759 Points)
08 October 2010
Samiksha
(Articles)
(345 Points)
Replied 08 October 2010
It wil be considered as speculation and will go under PGBP.
CA Ayush Agarwal
(Kolkata-Pune-Mumbai)
(27086 Points)
Replied 08 October 2010
If he is Taking Delivery Then Better to Take as Investment and Treat as Capital Gain/Loss.
& If No Delivery & Settled on same Day Then Speculation Income /Loss.
& if This is Nominal Income Then Take it as Other Income Otherwise its a Speculation Business Income/Loss.
& Accounting to Be Done as Per Inventory Maintainance and as Per FIFO basis.
CA CMA CS VIRAG SHAH
(9773395720)
(759 Points)
Replied 08 October 2010
sir but if he is done both........
means some time taking delivery & some time intraday & also both in oneday then wat 2 do ?????
CA Ayush Agarwal
(Kolkata-Pune-Mumbai)
(27086 Points)
Replied 08 October 2010
Then Both Will Be Taken.
I Mean Speculation profit as well as Capital Gain
Hitesh Kothari
(Chartered Accountant M.No. - 134239)
(326 Points)
Replied 08 October 2010
Dear Virag,
There is no clarification in this regard in Income tax Act, its all depend on the intention of the assessee how he wants to traet the same in his books of accounts.
However circular has been issued by CBDT in this regard specifying that the assessee can have two portfolio one is Investment in shares and second one is of Business Stock. Enclosed herewith circular and Questionnaire given by ITAT in various case laws, which will help you. Please take action at this time and have proper documentation in this regard to avoid any difficulty at the time of assessment proceedings.
A. Principles laid down by CBDT in circular 04/2007 dated 15.06.2007
“(i) Where a company purchases and sells shares, it must be shown that they were held as stock-in-trade and that existence of the power to purchase and sell shares in the memorandum of association is not decisive of the nature of transaction;
(ii) the substantial nature of transactions, the manner of maintaining books of accounts, the magnitude of purchases and sales and the ratio between purchases and sales and the holding would furnish a good guide to determine the nature of transactions;
(iii) ordinarily the purchase and sale of shares with the motive of earning a profit, would result in the transaction being in the nature of trade/ adventure in the nature of trade; but where the object of the investment in shares of a company is to derive income by way of dividend etc. then the profits accruing by change in such investment (by sale of shares) will yield capital gain and not revenue receipt”.
A. Details as per decision given by ITAT (Mum) in the case of Management Structure & Systems Pvt. Ltd. (ITA No. 6966/Mum/2007 – AY: 2004-05)
These principles of law have to be applied to the following facts (or answer to the below 8 question):
Regards
Hitesh
NANDINI MASAND
(learner )
(330 Points)
Replied 09 October 2010
Hi,
it simply depend that at the time of purchase its taken as what .......because income genrates only after sale..... n setteled in same day then its speculation income/loss....
if he is taking delivery on same day...n shares are held with him so its advisable to treat it as capital gain.
Master GSTR-9 and 9C with India's First Unique Live Course with Live practical training
LIVE Form 10 B and Form 10BB: Handle Tax Audit Reports of Charitable Organizations(without recording)