ITO, PAREL, MUMBAI vs. KUNAL GOVIND KATARIA, MUMBAI

ITA 2125/MUM/2026Status: DisposedITAT Mumbai22 May 2026AY 2010-118 pages
AI SummaryDismissed

What were the facts?

The Revenue appealed the CIT(A)'s decision to allow the set-off of speculative losses from derivative commodity trading on an unrecognized exchange against business profits. The assessee incurred losses on NMCE, which the AO disallowed as speculative, but the CIT(A) allowed the set-off.

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, stating that derivative transactions constitute the assessee's sole business activity. Therefore, profits and losses from these transactions should be treated as a single composite business and allowed to be set off against each other.

What were the issues?

Whether losses from derivative commodity trading on an unrecognized exchange can be set off against business profits. Whether derivative trading on different exchanges should be treated as a single business activity for set-off purposes.

Which sections of the Income-tax Act were involved?

Section 73,Section 43(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH: MUMBAI

Hearing: 19.05.2026Pronounced: 22.05.2026

PER VIKRAM SINGH YADAV, A.M :

This is an appeal filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeal) 47, Mumbai [‘Ld.CIT(A)’], dated 12.12.2025, pertaining to Assessment Year (AY) 2010-11, wherein the Revenue has taken the following grounds of appeal:

“1. Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the speculative loss incurred from derivative commodity trading through NMCE, an unrecognized exchange and allowing the same to be set off against business profits without appreciating the fact that the assessee's case

The order continues below.

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