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2012 (12) TMI 487 - AT - Income TaxDisallowance of claim of bad debts – AO argued that value of stock was not trading debt – Held that:- Following the decision in case of Shri Shreyas S Morkhia (2012 (3) TMI 103 - BOMBAY HIGH COURT) & assessee own case in earlier years - in favour of assessee. Disallowance on account of mark to market losses – Provision of loss debited in the P&L on mark to market of open contract - AO was of the view that the derivative contracts are not accounted for in the books of account at the inception thereof at the time of purchase, they do not and cannot form part of stock-in-trade and hence it cannot be valued at the time of preparation of balance sheet as stock-in-trade - Held that:- Following the decision in case of Edelweiss Capital Ltd (2012 (10) TMI 223 - ITAT, MUMBAI) that there is no dispute that the assessee holds derivatives as its stock-in-trade and there is also no dispute that it follows the principle “cost or market price, whichever is lower” in valuing the derivatives. While anticipated loss is taken into account in valuing the closing stock, anticipated profit in the shape of appreciated value of the closing stock is not brought into the account, as no prudent trader would care to show increased profit before its realization. Issue decides in favour of assessee Whether rebate u/s 88E for STT paid has been allowed from tax payable under MAT u/s 115 JB - Assessee had made the payment of tax under normal provisions by comparing his total income u/s 115 JB before claiming rebate u/s 88E – Held that:- Following the decision in case of Horizon Capital Ltd. (2011 (10) TMI 489 - KARNATAKA HIGH COURT) that when the total income is assessed and the tax chargeable is computed, it is from that tax which is chargeable, the tax paid u/s 88E is given deduction, by way of rebate, u/s 87. This is the mode in which tax already paid is handed back at the time of final computation. Issue decides in favour of assessee.
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