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Controversy about speculation transaction

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darshit (Querist)
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15 January 2011 One of our client has business of purchasing and selling of raw material. He made a contract with a raw material supplier that he will purchase raw material at a particular price after one month. But after one month the price of raw material increased so much that he opted out from purchasing raw material. Instead he was ready to pay the difference between inflated price and contracted price without taking delivery of raw material. Now my question is whether the transaction can be regarded as speculative transaction? Please read the clause (a) of the proviso to the section 43(5). Is there any other way of dealing with the loss suffered in this year only?

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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15 January 2011 It is not a speculation loss,it is a demurrage payble to supplier.

If at the time of initial transcation , matter was decided that delivery is optional, then it will be called speculation.

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