Query 1]

During F Y 2009-10, a person has a loss of around Rs. 25,000/- in F & O segment. He wishes to set off this loss against remuneration from partnership firm. Whether the set off is permissible? He has no other income. My query is how & exactly where in the ITR-4 should the loss in F & O segment be shown? Is it possible to show such loss in ITR-3? []


  1. The income from Derivative transactions (F&O) is not a speculative transactions and is normally taxable under the head “Income from Business & Profession”. The remuneration from a partnership firm is also taxable under the head “Income from Business & Profession” You can set off the loss in  F & O transactions against the Remuneration from Partnership Firm.
  2. The return in such case is require to be file in ITR-4. The set off is require to be mentione in “Schedule CYLA” at Sl. No. (iii) & (vii).


Query 2]

What is the income tax rule relate to taxability of profit arising on sale of agriculture land and long term gain calculations there on if the land is situate 10 km away from MahaNagarpalika Limits? []


  1. In normal course, any income from transfer of agricultural land shall be tax free if the agricultural land is not situate:
    (a) in any area which is comprise within the jurisdiction of  a municipality (Whether known as a municipality, municipal corporation, notify area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than 10,000 according to the last preceding census of which the relevant figures have been publish before the first day of the previous year; or
    (b) in any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in items (a), as the central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant consideration, specify in this behalf by notification in the Official Gazette.
  2. In short, Profit arising on sale of Rural Agricultural land used for agricultural activity situated 8 Kms beyond the municipal limit or a cantonment board with a population of less than 10,000 would be tax free.
  3. However, depending upon the facts & Circumstances of each & every case, if a person is engaged in the business of trading in agricultural land then the profit could be taxable as “Income from Business”. Similarly, if the agricultural land is purchased with a motive to instantly transfer it to earn profit then it could be considered as treating it as an adventure in the nature of trade & would be taxable under the head “Income from Business”.


Query 3]
  1. My wife has separate Bank A/c, Demat A/c, PAN card and does share trading out of money given by me. Will profit on this will be add to my annual income and tax accordingly? I am salaried employee.
  2. If I do share trading and earn profit, what is the tax liability, if I earn profit on:
    a] Intra-Day trading
    b] Delivery based and keep for less than one year
    c] Delivery based and keep for more than one year? []


  1. Where an asset is transferred by an individual to his spouse directly or indirectly, otherwise than for an adequate consideration or in connection with an agreement to live apart, any income from such asset is deemed to be the income of the transferor. [64(1) (iv) of the Income Tax Act-1961]. So even if your wife have a separate bank account/ Demat A/c & a PAN card, even then the income would be clubbed with your income by virtue of clubbing provision incorporated in section 64 (1)(iv).
  2. You are a salaried assessee. In normal course, the following tax provision shall be applicable:
    a] Income from Intra Day profit would be treat like your other income and would be taxable. At the regular rate depending upon your income slab.
    b] Income from delivery based share with a holding period not exceeding 12 months would be treated as short term capital gain & would be taxable at a flat rate of 15% if the transaction is covered by Securities Transactions Tax (STT).
    c] Income from delivery based share with a holding period of more than12 months would be treated as Long term capital gain & would be exempt from income tax if the transaction is covered by STT.


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