Accounting of open sale position and income tax concern.

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gautam chauhan (Querist)
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01 July 2012 As in demat format i can make short sale of shares and must sort it out till the end of next day.

if i do this for the 31st march, then in that case negative stock will comes in to existance.

how to deal with that?

if i purchase shares and if i consider it as closing stock i will make it mark to market for valuation as per AS 30.

in that case the notional loss arise (if the market price is less than cost price of the share) but in income tax we consider only real profit or loss. i m confused.

CA UMESHKUMAR R. ACHARYA

CA UMESHKUMAR R. ACHARYA (Expert)
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03 July 2012 (1) AS-30 is not applicable to Small and Medium Sized Entities.
(2) If you short sell that is to say sale of

shares without actual delivery then closing rate of 31-03-2012 of particular share shall be considered and diff between sale price and closing rate will be your speculative profit or loss as the case may be.
(3) In case of delivery based trading you have option to value your stock at purchase price or Market Price whichever is low just
like other Inventory.

(4) For E.G you have 100 share of X company
purchased @ 40 per share. You have not done any trading thereafter.and suppose market rate of that share on 31-03-2012 is Rs.60/-
Your Broker report will show gain of Rs.2000/-
But how one can earn till he has not
sold ?
In Fact there is no gain at all .
so you may proceed on above mentioned way which will show you correct profit or loss.

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