MTM losses incurred in regular course of business of ICICI Bank allowable as deduction: ITAT directs AO to bring MTM gain reverse back to tax [Read Order]
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that mark-to-market losses incurred in the regular course of business by ICICI Bank
![MTM losses incurred in regular course of business of ICICI Bank allowable as deduction: ITAT directs AO to bring MTM gain reverse back to tax [Read Order]](https://www.taxscan.in/wp-content/uploads/2023/12/MTM-losses-ICICI-Bank-ITAT-AO-MTM-TAXSCAN.jpg "MTM losses incurred in regular course of business of ICICI Bank allowable as deduction: ITAT directs AO to bring MTM gain reverse back to tax [Read Order]")
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that mark-to-market losses incurred in the regular course of business by ICICI Bank are allowable as a deduction for computing tax liability. Therefore, the bench directed the assessing officer to reverse the mark-to-market gain back to tax. ICICI Bank Ltd, engaged in the business of banking and related activities, filed a...
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that mark-to-market losses incurred in the regular course of business by ICICI Bank are allowable as a deduction for computing tax liability.
Therefore, the bench directed the assessing officer to reverse the mark-to-market gain back to tax.
ICICI Bank Ltd, engaged in the business of banking and related activities, filed a return and underwent scrutiny. During the proceedings, the assessing officer disallowed mark-to-market losses, claiming them as non-crystallized liabilities not eligible for deduction as business loss.
The assessee, dissatisfied, appealed to the CIT(A), who dismissed the appeal. Subsequently, the assessee filed a second appeal before the tribunal. Aarti Vissanji, Counsel for the assessee, argued that mark-to-market losses arise from derivatives in the regular course of business.
The assessee's representative pointed out that, based on the disallowed mark-to-market loss, a petition under section 154 was filed to reverse the offered mark-to-market gains, and the Assessing Officer complied. Therefore, if mark-to-market loss is allowed as a deduction, directions should be given to bring the mark-to-market gain back to tax.
Himanshu Sharma, Counsel for Revenue, contended that mark-to-market loss is not a real loss but a notional one arising from derivative reinstatement.
After reviewing the facts and records, the two-member bench, comprising Padmavathy S (Accountant Member) and Amit Shukla (Judicial Member), relied on the decision of DCIT vs Bank of Bahrain & Kuwait.
It was held that mark-to-market losses incurred in the regular course of business by ICICI Bank are allowable as a deduction.
Hence, the bench, while allowing the appeal filed by the assessee, directed the assessing officer to bring the mark-to-market gain back to tax.
To Read the full text of the Order CLICK HERE
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