Q & A F&O Loss - Whether speculative or Non speculative Loss
P.D.RUNGTA
Query:F&O Loss - Whether speculative or Non speculative Loss
Dear Member,
Can anybody help me out on the following
issue:
One of my client had incurred loss on
F&O transaction which was done
through recognized stock in the Asstt. Year 2008-09. The loss was sown
as non speculative transaction loss and
same has been set off with other non
speculative business profit.
The case has been selected for Scrutiny.
Now AO says that the same is speculative
transaction and the same will not be set off with the non speculative transaction.
Can any body help me out with some
judgment which can proof the same as non
speculative transaction.
CA. Roshan Agrawal
Reply-1
Dear Roshan JI
From A.Y. 2006-07 onwards, derative transactions will not fall in the purview of Speculative transactions. KOLKATA TRIBUNAL (SPECIAL BENCH) in case of Shree Capital Services 121 ITD 498 may be of great help in your case. If required, full text of the decision will be made available to you.
Further Delhi tribunal in case of G K anand bros 34 SOT 439 fully covers your case. i.e. future and option are non speculative transactions and loss shall be assessed accordingly.
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CA Bikash Bogi **(Partner) **SBR & CO. **CHARTERED ACCOUNTANTS*
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Reply-2
Dear Sir,
With effect from 26-01-2006 f & O transaction in notified exchange i.e.NSE and BSE is a non speculative loss. Find attached notification.
Regards
CA Jaysukh T. Mehta
Bhuj Kutch
Reply-3
Dear Roshan Agarwal,
Refer to Clause (d) of Sub Section (5) of Section 43 which reads as under
43(5) "Speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, incluidng stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips
Provided that for the purpose of this clause :
" an eligible transaction in respect of trading in derivatives referred to in clause (ac) of Section 2 of Securities Contracts Regulation Act, 1956 carried out in a recognised stock exchange shall not be deemd to be a speculative transaction.
In view of the act and provisions being specifically contained F & O transactions are not speculative transaction.
Hope this will be useful to you, in putting forth your views and arguments before the tax authorities.
best wishes
Sureshpr
Reply-4
Dear Mr Agarwalla
Pl refer to Explanation to Provisio (d) to Section 43(5) for items not
considered as Speculative.
Yours is Not a speculative transection it has to be considered as Business
Income or loss.
CA ATUL MEHTAA.P.MEHTA & ASSOCIATES39, Chakraberia Road (South)Kolkata - 700 025Mobile : 9830027784Office : +91+33+24741584
Reply-5
Dear CA. Roshan Agrawal Ji
Please find attached the latest Case Law
With Regards
CA.Vinod Kumar
09810969836
Best Regards,
Pramod Dayal Rungta
M.Com.,LL.B.,AICWA.,DISA(ICAI).,FCA
Member EIRC ICAI (2010-12)
P.D.Rungta & Co.
Chartered Accountants
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pawan todi
- ENTERED IN JOINTDEVELEPMENT AGRREMENT WITH BUILDER WHICH SAYS COST OF LAND INCLUSIVE THE FLAT CONSTRUCTION.
- PURCHASED UNDIVIDED LAND SHARE IN TN IN FY 2006. FOR 10 LAC
- PAID CONSTRUCTION COST AS PER JOINT DEVELEPOMENT AGREEMENT IN FY 2006- 5 LAC 2007- 5 LAC 2008- 5000000.
- GOT POSSESSION OF FLAT IN FY 2008
- WANT TO SALE PROPERTY IN FY 2011 WHEN 3 YEARS NOT COMPLETED A. FROM THE DATE OF POSESSION B. FROM THE DATE OF LAST PAYMENT. A. DATE OF PAYMENT IS AFTER DATE OF POSSESSION B. DATE OF POSSESSION IS LATER THAN TOTAL PAYMENT.
ISSUE
- COMPUTE CAPITAL GAIN IN ALL 4 SITUATION.
- WHTHER GAIN BE CALCULATED ON THE BASIS OF LAND AND THEN IMPROVMENT THEREON ?
- WHETHER 2 ASSETS... UNDIVIDED LAND AND THE BUILDING SUPERSTRUCTURE SHALL BE TREATED SEPERATELY AS DIFFERENT ASSETS.
LOOK FORWARD FOR URGENT REPLIES.
CA PAWAN KR TODI