Case Law Details
CA Sandeep Kanoi
The assessee basically is a share broker. The assessee also deals in buying and selling of shares for himself. The assessee is also dealing in derivatives. Dealing in derivatives has been excluded from the ambit of speculative transactions with effect from assessment year 2006-07. We are concerned with the assessment year 2005-06. The question arose whether the assessee was entitled to set off the loss arising out of business in derivatives against the income arising out of purchase and sale of shares. The question basically was as regards the meaning of the expression “speculative transaction”.
Clause (d) of Section 43 (5) became effective with effect from 1st April, 2006. Therefore, prior to 1st April, 2006 any transaction in which a contract for the purchase or sale of any commodity including stocks and shares was periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrip was a speculative transaction.
Sub-section 1 of Section 73 provides as follows:
“(1) Any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits and gains, if any, of another speculation business.”
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Thanks Sandeepji for the wonderful insights and fresh perspective into the subject matter.
Is this order applicable for individuals doing Intraday Equity trading? Can they set off losses in Intraday Equity trading (non-delivery based) with profits of Share trading (delivery based).
What if the individuals also have other income HP, Salary etc?
Raj