INCOME TAX ACT, 1961

Section 43(5), Expln. Section 73, Expln.

Loss - Set Off - -

Assessee company suffered loss on derivative transactions which was set off by against other business income earned by it. AO treated said loss as speculative loss by applying Explanation to section 73 and accordingly, held that loss could to be set off only against speculative income and not against regular business income earned by assessee. Held: Assessee company had derived income from house property, income from capital gains and income from other source which collectively represented 69% of gross total income of assessee-company. This clinching fact proved that assessee's gross total income mainly consisted of income from house property, capital gains and other sources and accordingly, case of assessee squarely fell within first exception provided in Explanation to section 73. Also, derivative transaction was carried out by assessee in recognised stock exchange through a stock broker registered with SEBI and thus, same fell within the expression of 'eligible transaction' as defined in section 43(5) and hence, it could be safely concluded that loss in derivative transactions incurred by assessee could be treated as speculation loss.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 14A Rule 80(2)(ii)

SUBSCRIBE FOR FULL CONTENT