Speculative business
This query is : Resolved
sabharinath
(Querist)
27 August 2015
Is trading in stocks and commodities in NSE, treated as income from speculative business or as normal business? Are the losses needed to be carried forward to the next year or to be charged in the current year itself as for any usual business loss?
CA R SEETHARAMAN
(Expert)
27 August 2015
Only intraday trade is speculative. Other than intraday trade loss can be adjusted against business profit.
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sabharinath
(Querist)
27 August 2015
Thank u for ur reply sir.... One more query.... Does this intraday trading rule apply to derivatives also? I heard they are completely non-speculative
Amol S Joglekar
(Expert)
27 August 2015
"whether transaction is carried out without ACTUAL DELIVERY" is the crux of speculative transaction.
In this regard, income tax department as well as courts have taken the view that derivative (Future as well as option) per se is speculative, be it stock or commodity or currency.
In this regard, income tax department as well as courts have taken the view that derivative (Future as well as option) per se is speculative, be it stock or commodity or currency.
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27 August 2015
Proviso (d) to section 43(5) says trading in derivative is a 'non-speculative transaction'.
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sabharinath
(Querist)
28 August 2015
Yes sir... That's the part confusing me....
According to section 43(5)" a derivative (F&O) transaction carried out electronically through a recognised stock exchange (NSE) is non-speculative..... But the actual definition says, "transaction carried out without actual delivery is speculative"....
One of our clients was trading in futures and options in NSE through a SEBI regulated broker electronically.... and incurred losses.... NOw I am in a dilemma, whether to charge those losses as an ordinary business loss and adjust it with other income during the year, or charge it as a speculative business loss and carry it forward to the next year....
Both the above definitions are confusing in this regard
According to section 43(5)" a derivative (F&O) transaction carried out electronically through a recognised stock exchange (NSE) is non-speculative..... But the actual definition says, "transaction carried out without actual delivery is speculative"....
One of our clients was trading in futures and options in NSE through a SEBI regulated broker electronically.... and incurred losses.... NOw I am in a dilemma, whether to charge those losses as an ordinary business loss and adjust it with other income during the year, or charge it as a speculative business loss and carry it forward to the next year....
Both the above definitions are confusing in this regard
Amol S Joglekar
(Expert)
28 August 2015
if it satisfies the proviso (d) and/ or (e) to sec 43 (5), then it not speculative.
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