How to Show Intraday and F&O Trading Income?

In recent years, many people have been involved in Intraday and Future & Options Trading in the share market.

The Tax Treatment of Intraday and F&O is totally different from that of Delivery Based Shares.

While the Delivery Based Shares are taken under Capital Gains, Intraday and F&O is considered as Business Income. Therefore, it also comes under Tax Audit implications if the turnover goes beyond the prescribed limit of Rs. 10 Crores.

Taxation of Intraday and F&O Incomes:

(1)Intraday Income: It is considered as Speculative Business Income and therefore if there are losses under Intraday Trading, it cannot be merged with ANY other income. However, it can be carried forward for next 4 Assessment Years.

(2)F&O Income: It is considered as Non-Speculative Business Income. Therefore, it becomes normal business income (like any other business).

If there are losses under F&O, that can be set off against any other Income (excluding Salary and Special Rate Incomes). Losses remaining after set off can be carried forward for next 8 Assessment years.

Import of Boats for Tourism Purpose classifiable as ‘Excursion Boats’ Eligible for Customs Exemption

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai bench has allowed customs exemption for the import of motorboats to be used for tourism purpose.

The assessee, M/s. E-Factor Adventure Tourism (P) Ltd, imported two used motorboats describing the same as “Excursion Boats” and filed Bill of Entry No.4913901 dated 23.01.2018 and classified the same under CTH 89011030 and have availed exemption in terms of Sl. No.551 of Notification No.50/2017–Cus. dated 30.06.2017. The Bill of Entry was selected for first check examination and on the basis of the examination of the report dated 31.01.2018 the department sought to classify the goods under CTH 89039200 and the provisional assessment was ordered to be finalized; the differential duty of Rs.1,71,39,839/-, was confirmed, vide OIO dated 23.03.2019.

The department observed that boats or vessel are not registered with MMD and classified the boat as pressure yacht.

A bench of Ms. Sulekha Beevi, Member (Judicial) and Mr. P. Anjani Kumar, Member (Technical) has observed that in terms of Merchant Shipping Act, 1958, the boats cannot be registered as they are more than 20-25 years old and are of less than 20 tonnage and as the area of operation is in Vizag, MMD Chennai cannot register them and they are to be registered locally only.

After analysing the facts deeply, the ebnch observed that the boat to be considered as a pleasure vessel or boat is to be owned and used by an individual or a body corporate for themselves or a group of people who are duly authorized or permitted.

“Whereas in the instant case, the boat is used for tourism purposes. It can be seen that Government of Andhra Pradesh, Port Department, Kakinada have issued a provisional certificate of registration to the boats imported by the appellants. The Department of Tourism, Government of Andhra Pradesh, Visakhapatnam have certified that the boats are imported by the appellants for the purpose of creating excursions and itineraries in Vizag to facilitate development of promotion of tourism in adventure. This being the case, we find that it is not open for the department to consider the boats to be pleasure yachts to be used by a person or group of persons.”

“In view of the above, we are of the considered opinion that the impugned order, has erred in concluding that the imported boats are yachts classifiable under CTH 8903, cannot be sustained. In view of the discussion above, we hold that the same are classifiable under CTH 8901,” the Tribunal concluded.

Income Tax Liability won’t arise for Unsecured Loan Transactions done by Group Entities: ITAT

The Income Tax Appellate Tribunal ( ITAT ), Mumbai Bench has held that income tax liability won’t arise for unsecured loan transactions done by group entities.

The Assessing Officer received information from the investigation wing during the course of search action on M/s. Evergreen Enterprises group cases,a cash loan of Rs.3.92 crores for which the name of assessee, Mr. Vipul Dilipbhai Shah was recorded as contact person and his mobile number was also available in connected seized documents.

The AO reopened and completed the assessment u/s 147 r.w.s. 143(3) of the Act, after making the addition of Rs.3.92 crores as an unexplained loan in terms of section 69A of the Act. On further appeal, CIT(A) deleted the additions. Aggrieved revenue filed appeal before ITAT.

The Coram of Mr. Sanjay Garg (Judicial Member) and Mr. Om Prakash Kant (Accountant Member) has observed that the recipient of the loans was M/s. Greenbird (Rs.50 lacs) and M/s. P.D. Constructions (R$.3.42 crs.) and not the assessee. The assessee’s name was appearing only as contact person and for the simple reason that he was to be a partner/director of the said concerns and both Greenbird and P.D. Constructions were his group entities. The assessee could not be held liable for unsecured loan transactions done by his group entities.

The Tribunal has held that “we do not find any error in the order of the CIT(A) on the issue-in-dispute and accordingly, we uphold the same. The grounds raised by the Revenue are accordingly dismissed”.