Claim of setoff of Business Losses against Speculative Income is allowable: ITAT [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has held that the claim of set-off of business losses against speculative income is allowable

The assessee challenged the order passed by the Commissioner of Income Tax (Appeals), Gandhinagar [hereinafter referred to as “CIT(A) under section 250(6) of the Income Tax Act, 1961 (the Act) dated 04.01.2019.

The assessee had earned profits of Rs.12,47,234/- from intra-day trading of shares, against which it had set off the loss of share trading business of earlier years.  The AO denied the same by relying upon the decision in the case of CIT Vs. DLF Commercial Developers, 91 DTR 49 (Del) and the CIT(A) upheld the order of the AO.

The AO confirmed addition under section 68 of the act based on unsecured loans obtained from Shri Chirag B. Patel, who had given an amount of Rs.18,000/- in cash.

The assessee contended that it was by law as prescribed by section 72(1) of the Act which specifically deals with carrying forward and setting off of unabsorbed business losses. Further stated that unabsorbed business losses can be set off against any income from the business, be it speculative or otherwise. 

It was evident from section 72(1)(i) that the assessee is entitled to claim the set off of the unabsorbed business losses from speculation business income of the impugned year.

The Tribunal observed that the assessee had proved the genuineness of 99.5% of the unsecured loans taken and had given an explanation for non-service of notice under section 133(6) about this small deposit of Rs.18,000/-.

Smt Annapurna Gupta, Accountant Member and Smt. Suchitra Kamble, Judicial Member viewed that the loan can be said to be genuine and deleted the addition made under section 68 of Rs.18,000. The appeal of the assessee was allowed.

The Assessee was represented by Shri S.N. Divetia and the Revenue was represented by Shri V.k.Singh.

To Read the full text of the Order CLICK HERE

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