speculative transaction u/s 43(5)
This query is : Resolved
18 November 2010
One of our client is a trader in shares.His turnover has exceeded Rs.40 lacs. Regarding the taxability of the profit from this business, I have the following questions:
1. Whether intra day transactions will be treated as speculative transactions?
2. Whether profit/loss on shares purchased and sold before settlement period (T+1 OR T+2)will be treated as speculative income/loss or normal business income/LOSS?
3. If the shares are not transferred to the demat account and the sales are made directly from the pool account, whether it will be treated that delivery has not taken place or we can assume that constructive delivery has taken place AND HENCE WILL BE TAXABLE AS REGULAR INCOME/LOSS.
Please clarify the above points and give case laws, if any.We have taken the entire loss on trading in shares as normal business loss and adjusted against other business income. Now the ITo wants to assess the loss from shares as speculation loss.Are there any favourable points we can give in support of the assessee?
1. Whether intra day transactions will be treated as speculative transactions?
2. Whether profit/loss on shares purchased and sold before settlement period (T+1 OR T+2)will be treated as speculative income/loss or normal business income/LOSS?
3. If the shares are not transferred to the demat account and the sales are made directly from the pool account, whether it will be treated that delivery has not taken place or we can assume that constructive delivery has taken place AND HENCE WILL BE TAXABLE AS REGULAR INCOME/LOSS.
Please clarify the above points and give case laws, if any.We have taken the entire loss on trading in shares as normal business loss and adjusted against other business income. Now the ITo wants to assess the loss from shares as speculation loss.Are there any favourable points we can give in support of the assessee?
18 November 2010
Proviso to section 43(5) is very clear. The loss incurred is speculative and the ITO's view will sustain.
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