??Shares as Stock-in-Trade---VALUATION??

As my openion you are use your income capital gain ( Short Term or Long Term) and stock valuation use As FIFO( First In First Out )

As 

purchase RIL 10 share @ 1600.00

purchase RIL 5 Shares @ 1610.00

Sale           RIL 5 shares @ 1550.00

Sale           RIL 5 Share @ 1800.00

As above Your Stock Valution Is RIL @ 1610.00

But Sir, assessee is dealing in stock market almost DAILY & he has done it for purpose of gaining that is why whatever he is earning is computed under P/G/B/P & not Capital Gains.

That is why there is need to valuate shares as Stock-in-Trade & AS-2 is not applicable in this case.

Dear Ankit

In both kind of trading if amount of trading exceeds Rs. 40 Lakhs the assessee needs to get his books audited. Secondly the valuvation of stock can be done on two basis first the market price of that particular share or purchase price of that share wich ever is low.  As you said he is not doing this business for just investment but he is doing this business in regular basis, so instead of short term capital gain or long term capital gain, treat his income as income from business.

Sir that is why i am asking for valuation method as you have said that valuation to be done at lower of market value or cost and till now(for 2 assessment year) this approach is applied. But recently i have studied AS-2 & it said this AS is not applicable, as the relevant matter is under:

as per para 1(c) under Scope of AS,

Scope
1. This Statement should be applied in accounting for inventories other
than:

(a) work in progress arising under construction contracts,
including directly related service contracts (see Accounting
Standard (AS) 7, Accounting for Construction Contracts);

(b) work in progress arising in the ordinary course of business of
service providers;

(c) shares, debentures and other financial instruments held as
stock-in-trade; and

(d) producers’ inventories of livestock, agricultural and forest
products, and mineral oils, ores and gases to the extent that
they are measured at net realisable value in accordance with
well established practices in those industries.

Therfore i was asking for proper technique/methodology for valuation of shares & may be AS30,31,32 related with financial instrument deal with it?

the valuation of stock shares for capital gain is not use as  market value or cost which in lower its valuations are use as first come first out means rate of first purchase are adjusted to first sale and the profit/loss are shown

Purchase

01.04.2009 purchase 10 sh. @ 1000

01.04.009 purchase  10 sh @ 1050

02.04..09 purchase 5 sh. @ 1100

Sale

01.04.2005 sale  5 sh. @ 1100 Profit/loss = 5 x 1000 = 5000 less 5 x 1100

202.04.09 sale 15 sh @ 900 (5 x 1000+10x1050-15x900