Derivative trading income of FIIs taxable as capital gains, and not as ‘speculative’ income

In a recent ruling, in the case of  LG Asian Plus Ltd. Vs. Asst. Director of Income-tax the Mumbai Income-tax Appellate Tribunal has held that income earned by a Foreign Institutional Investor from derivative trading would be taxable as `capital gains’ in view of special provisions under section 115AD of the Income-tax Act, 1961. The Tribunal also held that under the Act, income could be treated as ‘speculative’ only if it was taxable as ‘business income’. The Tribunal accordingly ruled that FII income would not be treated as ‘speculative business income...