A division bench of the Delhi ITAT, last day ruled that the loss on the sale of Mutual Fund can be treated as business loss and therefore, such loss can be set off against the business income under the provisions of the Income Tax Act, 1961.
Assessee, M/S Cosmos International Ltd, was engaged in the business of Exports of several items and also doing Commodity Business in Future Trading. For the year under consideration, the Assessing Officer rejected the Assessees’ claim for deduction of business loss on account of loss on the sale of Mutual Fund finding that the same amount to capital loss.
The division bench noted the fact that assessee is engaged in the business of trading in securities and shares.
The bench said that “It is undisputed fact that the loss has been incurred during the normal course of the business. Since the assessee’s only source of income was his interest and in this view the loss incurred on the sale of mutual fund has to be held as business loss. Therefore, this issue is covered by the judgment of the Hon’ble Supreme Court in the case of CIT vs CocanadaRadhaswami Bank Ltd. (1965) 57 ITR 306 (SC), wherein it was held that since the entire income of the assessee include interest on securities, the assessee was entitled to set off such losses out of its business income.”
The bench also noted that AO cannot dispute that the loss arising from sale of investment will be capital gain as against business loss claimed by the assessee. The same stand was followed by the assessee in the earlier years and there is no addition made by the AO in the earlier and succeeding years.
Read the Full Text of the Order Below
