SHREE GANESHAY NAMAH :

POSERS ON SHARE MARKET/COMMODITY MARKET TRANSACTIONS

BY : CA PALAK B PAVAGADHI

  1. ABC Firm is trading in the Guar Gum & Products related to Guar Gum. It has received Various Orders for supply of Goods from Foreign Countries. The Goods are yet to be manufactured & Raw Material for the same is yet to be procured. ABC Firm has agreed to supply the goods in future at the current rate. ABC Firm is having the fear of price increase in the Raw Material as the commodity is volatile. To overcome the same assesse has entered into Forward Contract to Purchase the Guar Gum in the commodity market. Unfortunately ABC Firm has earned income in the Delivery based Transaction & made Loss in the Forward Contract Through Commodity Market Transaction. ABC Firm has set off the Loss against the business income. AO has objected. Whether the stand of AO is justified?
  2. Mr. X is maintaining Two Portfolios, one for the Investment & other for the Stock in Trade. He has also recorded the income under the head Capital Gain & Business Profession Respectively. AO has objected the same & he is of the opinion that there is no strong base to bifurcate the same. It has to be recorded as Business Income only. How would you plea your case.
  3. My Investment Consultant is advising me to make investment in Debt Oriented Mutual Fund as it is giving the return which is higher than the return on FD. He is also advising from the Taxation aspect to make investment in the Debt Oriented Mutual Fund. Whether the advice of the investment consultant is correct from the view point of taxation.
  4. Mr. A has earned LTCG from Gold worth Rs.30,00,000 during the PY 2015-16. He has also incurred LTCLoss worth Rs. 33,00,000 from Listed Equity Shares sold through Recognised Stock Exchange on which STT is paid by him. Such loss is the loss of Exempt Source. Mr. A is advised by Tax Consultant not to make any investment in the Bonds of NHAI to avail the Exemption u/s. 54EC as he will get such LTC Loss Set off against the LTC Gain. Would you agree with the advice of the consultant?
  5. Mr. K has given Rs. 25,00,000 to be managed by the Portfolio Manager Dhanvarsha Securities P Ltd. He is seeking your advice whether the income is treated as Business or Capital Gain.
  6. Mr. X is engaged in the Future & Option Transactions in Shares & Commodities. The Transactions are settled otherwise than actual delivery. He has given following statement of the settlements during the PY 2015-06.

Transaction Type / Profit / Loss
F & O of L & T Shares / 21,00,000
Forward Contract in Guar Gum / 12,00,000
F & O of RIL / 23,00,000
F & O of SBI / 25,00,000
Forward Contract in Custard Oil / 13,00,000
F & O of TCS / 17,00,000
TOTAL / 76,00,000 / 35,00,000
  1. Mr. X is of the opinion that as the net income is Rs. 41,00,000 ; he is not required to get the books of accounts audited. Whether his stand is justified ?
  2. If there is Loss of Rs. 3,00,000 from F & O of RIL in place of Loss of Rs. 23,00,000 : whether the audit is required ?
  3. In b above is it open for the assesse to show income to be 8 % of turnover to opt for presumptive tax system u/s 44 AD?

THANK YOU