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2011 (11) TMI 454 - AT - Income TaxLoss on derivative trading - "Short Term Capital Loss" OR "Business Loss" - Held That:- Nature of contract suggests that assessee is actively involved in day to day operation of share trading activity. Therefore, keeping in view the risky nature of transaction, it can not be said that derivative transactions were part of investment portfolio of assessee. Further, assessee also had earlier debited loss in P/L A/c, hence loss is covered under the head "profit and gains of business or profession" and not under the head "capital gains" - Decided in favor of Revenue TDS on brokerage paid to agency for facilitating derivatives trade - Held That:- Derivatives are securities and, therefore, clearly covered by the exception provided in Explanation (1) to Section 194H. Therefore no liability to deduct TDS - Decided in favor of assessee Proportionate dis-allowance u/s 14A in respect of "Key Man" Insurance Premium paid - dividend income exempt u/s 10(34) & long term capital gain exempt u/s 10(38) also earned during the year - Held That:- Sum paid towards Insurance Premium was not relatable to earning of income not chargeable to tax. Also, Keyman Insurance Policy are fully taxable u/s 28(vi), therefore, the expenditure relating to the same cannot come within the ambit of section 14A - Decided in favor of assessee. Proportionate dis-allowance u/s 14A in respect of management fee paid - Held that:- It is not disputed that fund management fees paid had no nexus with the earning of dividend but was calculated and paid with reference to appreciation achieved in the investment during the defined period. Therefore, the dis-allowance u/s 14A was not warranted - Decided in favor of assessee Set off of Short Term Capital loss (STT paid) against Short Term Capital Gain (without STT) - Held That:- There is no prohibition nor the Act compels the assessee to first set off short term capital gain with STT against short term capital loss with STT and then allows set off against short term capital gain without STT. In absence of any such specific mode of set off prescribed in the Act, the assessee was entitled to exercise his option with regard to the chronology of set off which was most beneficial to him - Decided in favor of assessee.
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