Nature of Business Income

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Narendra Maru (Querist)
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14 May 2009 Company authorised by its MA to carry on Trading Activities in Shares and Securities, Started doing business on day to day basis in shares & Securities i.e.Equity Shares and F & O Segment of Share Market.
Query: Whether Income from Tranction for Purchase and Sale of Same Shares or Securies in same day i.e. Day Trading (Transaction squared up in the same day)shall be regarded as Regular Business Income of Company or Shall it be regarded as Speculative Income for Income Tax Purpose?
Does it make any differance in stand if there is first purchase and then sale of same shares or securities in same day?

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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14 May 2009 Its business income for a Company, if doing it on regular basis.

Vishal A V

Vishal A V (Expert)
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14 May 2009 Dear Maru,

Even though M & A state that the company may trade in share and securities, it is construted that the company takes delivery of the shares, but the kind of activity indulged by the company there is no delivery but mere day trading amounts to speculative business even when done on regular basis, hence the income is speculative in nature.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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14 May 2009 It is definitely business.
Speculative or Non-speculative will depend whether the delivery is taken or not.
But transactions in F&O are not speculative.

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