Dear Sir,
Hope you are doing well.
Personal investments such as mutual funds, life insurance policies, fixed deposits, and other assets held in an individual capacity are generally not required to be included in the business balance sheet of a person engaged in F&O trading.
The business balance sheet should normally contain only those assets and liabilities that relate to the trading business. Personal investments should be kept separate from business assets.
However, if the Income Tax Return requires disclosure of capital account or personal assets and liabilities, such investments may be reflected for reporting purposes. This does not mean they form part of the business.
Therefore, where an individual is engaged in F&O trading and the investments are purely personal in nature, mutual funds, insurance policies, and other personal investments need not be shown as business assets in the balance sheet.
Even though personal investments and deposits are not included in the F&O business books, the income earned from them must still be reported separately in the income-tax return under the appropriate head. For example, F&O profit/loss is generally business income, FD/savings interest and dividend are generally taxable under Income from Other Sources, while profit from sale of personal investments is generally taxable under Capital Gains (subject to the nature of the investment). Thus, personal assets need not be shown as business assets, but the income arising from them must be disclosed separately in the ITR.
