Practical Income Tax Problem Solution Verification

Hi prasad your income statement is wrong. You should not prepare P&L accont. You ve to prepare Income & Expenditure account. That is not the way to compute profit or loss on sale of shares. For detail go through Capital gain head.

hi.. Prakash....Thanks for your comments.....but I am still in confusion if you correct. If the shares purchased has been sold within the financial year then I think it should not come under the head of Capital gain. further the stock of shares is not shown as investment in balance sheet which implies that the holding is for short term only. What is your next comment please.....

Hi Mahavir,

Investment can be of 2 Types :-

1) Trader :- In this case any income (or loss) will be computed under head PGBP..Amount of STT Paid will be allowed as deduction in computing the Income under head PGBP i:e in your case the amount of STT will increase the Loss..Since Business loss cannot be setoff against Salary Income but it can definatelt setoff against the income from other sources...and the Net after setting of with other sources will be carried forward if the Return  is filed within due date.

2) Investor :- In this case any gain (or loss) will be computed under head Capital Gains...STT will be dead expenditure and no deduction of STT amount will be available..Short Term .Loss u/s 111 A cannot be set off with any other Income and hence it will be carried forward if Return is filed with in Due Date 

Hi Prasad

If the shares are sold with in the year then it will attract tax under sec 111 A  i,e short term capital gain. In case of loss you can carry forward the loss and sett off for next 4 years. provided you must file a return of loss with in the due date prescribed u/s 139 (1). Any expenditure incurred in relation to transfer of shares can be deducted while computing capital gain. If any queris plz do reply.

Hi... Amir Thanks for your reply.... Further, please confirm whether the details prepared are correct or not......

Hi.... Prakash....Thanks for your reply.... Why the the profit/loss should not be come under the head Income from Business or Profession instead of Capital Gains...... as you are talking about....

After going through the satement you have prepared ,iunderstanf you have made forperosn who deals in securties ,if you intend to make for them my observation is as follows

1. That  STT  in now allowable expenditure ,you need tomake ammendment in it,

2. That you have not said any thing about theperson who are doing derevative trades,aslo add it . whiledoing so take care in case of option trades, pls go through the guidence note of ICAI for it .

I HAVE TO FILE ITR FOR LAST YEAR FOR SHARE TRANSECTIONS WHICH IS OVER ALL LOSS BUT COMPLETE INFORMATION IS NOT AVAILABLE SO CAN I SUBMIT IT ON ESTIMATED TURNOVER.