GEETA ARVIND HARIA,MUMBAI vs. ITO WD 26(1) (1), MUMBAI

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ITA 2236/MUM/2021Status: DisposedITAT Mumbai19 May 2022AY 2015-163 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the explanation to Section 73 of the Income Tax Act is applicable to companies and not individuals. Losses from derivative transactions on a recognized stock exchange are eligible for set-off against other business income.

What were the facts?

The assessee incurred losses of ₹7,34,243/- from trading in derivatives and sought to set them off against other business income and income from other sources. The lower authorities treated these losses as speculation losses and denied the set-off.

What were the issues?

Whether losses from derivative trading by an individual on a recognized stock exchange can be set off against other business income. Applicability of Explanation to Section 73 to individual assessees.

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, “SMC” BENCH, MUMBAI

For Respondent: Shri Anil Gupta, DR
Hearing: 19.05.2022Pronounced: 19.05.2022
1.

The present appeal has been preferred by the assessee against the order dated 10.11.2021 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).

2.

The assessee in this appeal has taken the following grounds of appeal:

“The appellant submits the following grounds:

1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in confirming the denial of set-off of

2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in treating the losses amounting to 7,34,243 incurred from trading in derivatives as speculation losses by relying upon the decision of Delhi High Court in the case of CIT vs. DLF Commercial Developers Ltd. without appreciating that Explanation to Section 73 is not applicable to the appellant as she is an individual assessee and not a company.”

3.

In this case, the assessee has been denied the set off of losses amounting to ₹7,34,243/- incurred from trading in derivatives as against the business loss and income from other sources. The plea of the assessee is that since the transactions were carried out at recognized stock exchange, the assessee is entitled to set off of losses in transactions in derivatives against business income and other income. The lower authorities have relied upon the explanation of Section 73 of the Act in treating the transaction in derivatives of the assessee as speculation business and thereby denied the set off of losses.

4.

No one has put in appearance on behalf of assessee despite notice, therefore, I proceed to decide the appeal after hearing the learned Departmental Representative and going through the records.

6.

Accordingly, the disallowance made by the lower authorities is ordered to be deleted.

7.

In the Result, the appeal of the assessee stands allowed.

Order pronounced in the open court on 19.05.2022.

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