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2011 (3) TMI 26 - AT - Income TaxSet off - Speculative Loss - Disallowance of Rs.2,04,12,594 being the amount of loss in respect of future and options transactions - The Assessing Officer came to the conclusion that it was to be treated as loss from speculation business in terms of section 43(5) - Held that: Insertion of clause (d) of proviso to section 43(5) is prospective in nature as applicable from 2006-2007 - in view of Special Bench of the tribunal in Shree Capital Services Limited v. ACIT [2009 -TMI - 59828 - ITAT CALCUTTA] issue decided in favor of revenue. Disallowance of Administrative expenses have been incurred for F & O transactions amounting to Rs.4,94,649 - Explanation 2 to section 28 clearly provides that where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the speculation business shall be deemed to be distinct and separate from any other business - speculation business and non-speculation business are to be considered as distinct from each other and consequently the common expenses debited to the profit and loss account also need bifurcation into these two segments - The splitting of expenses on the basis of turnover, in the absence of other reasonable measure suggested by the learned A.R., is reasonable - Issue is decided in favour of Revenue. Adjustment u/s 115JB - diminution in the value of investments - Rs.1.25 crores - Once provision is made for diminution in the value of any asset, the same has to be added for computing book profit, regardless of the fact whether or not there is any balance value of the asset. - as the Explanation 1 to section 115JB(2) deals with the computation of book profit and specifically provides that the net profit as shown in the profit and loss account for the relevant previous year has to be increased inter alia by the amount of provision for diminution in the value of any asset, the amount of provision for diminution in the value of any asset debited to the profit and loss account before the determination of net profit has necessarily to be added. - Decided in favor of revenue.
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