Shares Investing cum trading (accounting)

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My client is a  long term investor in shares and alsosometimes does short term trading but is not full time trader.

For convenience, he uses TALLY programme and makes all buying and selling entries thru the programme and so share on hand are shown as stock in hand (opening stock, closing stock like)

Is it ok to show shares in account as stock or will he be considered a trader just because of his method of accounting and benefit of exemption of L.T. C. G will be denied even where applicable because of accounting method?

Replies (3)

PLZ , refer to the case law , i have seen such case law but exact name could not come up to my mind .

Anyone with any more info. in this case please?

method of accounting is irrelavent .the assessee has option to chose one of these two options

1.the income form trading can be shown as business income

2.or it can be shown as capital gain as long term or short term what ever it may be

if he show as business income then he can claim all expences as deduction .

if he shows as capital gain then income form business or profession is allways shown as loss.and there fore he can set off the loss from capital gain.

so it is betar to fallow second option he can get long term capital gain exemtion and can setoff  business losses too

but the assessee has to fallow the option consistently

this issue is in appeal to heigh cout .the pre court has given the decission said above and fallow the option consistently.

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