The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) deleted additions made towards the loss incurred on the derivative transactions carried through the proper banking channel.
The Assessee Kulvinder Nath Marwah, is an individual deriving income from business, house property and from other sources. The return of income for the Asst. Year 2014-15 was filed by the assessee on 30.9.2014 declaring total income of Rs.57,54,800/-.
During the assessment proceedings the AO observed that the assessee had claimed loss on derivatives of Rs.14,43,040/- which was adjusted against the profits of the wine shop in the return of income.
After examining the submission of the assessee the AO concluded that the assessee had not carried out the derivative transactions through a stock broker or sub-broker or intermediary registered under section 12 of the SEBI Act and accordingly treated the said derivative transaction as a speculative transaction in terms of section 43(5) of the Act and disallowed the same.
Aggrieved by the assessment order assessee file appeal before the CIT(A), who dismissed the appeal. Therefore the assessee filed another appeal before the tribunal.
Pradeep Jindal, Counsel for the assessee submitted that AO had not understood the modus operandi of the activities carried out by the assessee in derivative transactions. The assessee had undertaken derivative transaction through sub-brokers namely PK Gupta & Sons ( HUF ), Shri Krishna Shutterings Pvt Ltd and Shri Subhash Chand Gupta. Hence all the transactions were carried out through recognized stock exchange duly suffering Securities Transaction Tax ( STT ).
Maimun Alam,Counsel for the Revenue, upholds the decision of the lower authorities.
It was said by the tribunal that they are inclined to accept the contentions of the assessee and the loss of Rs 14,43,040/- alone had to be disallowed which had already been done by the ld. AO in the assessment and accepted by the assessee by not filing any appeal. Hence there is no need to make any separate addition on account of alleged payment of margin monies on an estimated basis.
After reviewing the submissions of both parties the two-member bench Of M. Balaganesh, ( Accountant Member ) and Anubhav Sharma, ( Judicial Member ) deleted additions made towards the loss incurred on the derivative transactions carried through the proper banking channel.
Therefore the bench allowed the appeal filed by the assessee.
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