treatment of trading in commodities on different exchange

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Querist : Anonymous

Querist : Anonymous (Querist)

05 February 2011 I as company is engaged in trading of commodities on ncdx,multicommodities exchange ,mcx exhange and purchase sale of commodities from farmer and industries .how shall be treatment for capital gain,business income or speculative income.
pl consider new cicular of recognise stock exchange of mcx exchange

1)i have stock of commodities and future sale against it
2)I sale commodities in future and than carray forward transactions till due dateoror squred up on same day for which i have no delevery

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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06 February 2011 Your query is about-
Q1. company "I" , which is engaged in trading of commodities on ncdx
1. Ans: Non Speculative business as trading transactions are supported by actual delivery.

2.,multicommodities exchange ,mcx exhange
2.Ans. Non Speculative business as it is a recognised stock exchange.

3 and purchase sale of commodities from farmer and industries
Non Speculative business as trading transactions are supported by actual delivery.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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06 February 2011
Q 1. 1)i have stock of commodities and future sale against it

Ans. In section 43(5) (a) : Non- Speculative business transaction.

2)i)I sale commodities in future and than carry forward transactions till due date, or

Keeping the position of Q No 1 in view
Non- Speculative business transaction.
ii) or squred up on same day for which i have no delevery
1. in MCX - Non Speculative
2. in unrecognised stock exchange or "Dabba" : Speculative

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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06 February 2011 Q. How shall be treatment for capital gain,business income or speculative income.

Ans. Since commodities are treated as Stock in Trade, which is out side the per view of
the definition of Capital Asset. Hence No capital gain will arise.

As regards speculative and non speculative business income, you may check the point wise replies published above.

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Querist : Anonymous

Querist : Anonymous (Querist)

07 February 2011 Your query is about-
Q1. company "I" , which is engaged in trading of commodities on ncdx
1. Ans: Non Speculative business as trading transactions are supported by actual delivery .

QUE :pl sepcify if not delevery base on ncdx and is it recognise stock exchange?

2)i)I sale commodities in future and than carry forward transactions till due date, or

Keeping the position of Q No 1 in view
Non- Speculative business transaction.
ii) or squred up on same day for which i have no delevery
1. in MCX - Non Speculative
LTd.
QUE: there are two other exchange of mcx like for spot transaction and currancy transaction.pl specify as per cicular word is MCX stock exchange

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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07 February 2011 Q. :pl sepcify if not delevery base on ncdx and is it recognise stock exchange?

Ans. NCDX is not a recognised stock exchange to the best of my information.
Only Delivery Based Transactions in it will be treated as normal business transactions.
Non Delivery Transactions will result into speculation profit/loss.

CA PARAS BAFNA

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07 February 2011 QUE: there are two other exchange of mcx like for spot transaction and currancy transaction.pl specify as per cicular word is MCX stock exchange

Ans: MCX has been recently denied to grant
recognition for the purpose of other areas.
Hence transactions entered other than commodities futures may still be treated as speculative transactions provided these are not supported by related business & delivery.

Querist : Anonymous

Querist : Anonymous (Querist)

07 February 2011 thx a lot and you confirm my view that ncdx transaction on future are speculative and not on mcx.
mcx denied new exchange for securities but all transaction of spot,future and currency are non speculative transaction.i appreciate instance reply.
nimesh shah ca from ahmedabad.
any body has different view can reply.

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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10 May 2011 I BELEIVE THAT TRANSACTION ON ANY COMMODITY EXCHANGE WILL GIVE RISE TO SPECULATIVE GAIN /LOSS BECAUSE SECTION 43(5) ONLY RECOGNISES TRANSACTION IN SHARE FUTURES NOT COMMODITY FUTURES
MCX HAS BEEN NOTIFIED FOR THE PURPOSE OF SECTION 43(5) BUT THE SECTION 43(5) DOES NOT COVER TRANSACTIONS IN COMMODITY FUTURES

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