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sextion 43(5)

suneet (CA FINAL) (421 Points)

12 June 2009

please can any one explain what is this

actual deleivery or transfer of shares

commodity or scrips

and also explain what is the scope of section 43(5) relating to stock market

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Anumanchipalli Sathikonda (Tax Consultant) (1559 Points)
Replied 10 July 2009

Mr.Suneet

Imagine that you and your friend are doing speculative business.

For example take the price of a share as on particular date. Imagine that your friend is holding some number of shares. Now you will enter into an agreement that you will purchase 10 number of those shares on a particular day in the futue if the price of the share is Rs.100/- (per share). Imagine now that the price of that share is Rs.95/-.

On the particular day as agreed between you and your friend the price of the share is Rs.100/-. The your friend will pay you Rs.50/- being the difference of the price Rs.100/- and Rs.95/- for ten shares at the rate of Rs.5/- per share.

In this transaction no shares are delivered to you physically by your friend.

Hope you have understood the subject matter.

Best Wishes

Sathikonda