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2014 (2) TMI 365 - AT - Income TaxConfirmation of disallowance of mark-to-market loss Held that:- The decision in M/s. Indsec Securities & Finance Ltd. Versus The Deputy Commissioner of Income Tax [2014 (1) TMI 1382 - ITAT MUMBAI] followed - It is not only the actual stock but derivatives can also be held as stock in trade and the principle "cost or market price whichever is lower" has been rightly followed by the assessee in valuing the derivatives and further when the derivates are held as stock in trade then whatever rules apply to the stock in trade will have to apply to their valuation also - While anticipated loss is taken into account while valuation of closing stock, anticipated profit in the shape of appreciated value of the closing stock is not brought into account, as not prudent trader would care to show increased profits before actual realization thus, mark to market losses on account of trading in derivative transactions are allowable deductions Decided in favor of Assessee. Deduction u/s 80-IB of the Act Interest received on FDRs Held that:- The decision in Pandian Chemicals Ltd. Versus Commissioner of Income-Tax [2003 (4) TMI 3 - SUPREME Court] followed - interest income is not directly flowing from the Industrial Undertaking as such deduction for the same is not allowable - the words 'derived from' in Section 80HH must be understood as something which has direct or immediate nexus with the appellant's industrial undertaking. Although electricity may be required for the purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking - The derivation of profits on the deposit made with Electricity Board cannot be said to flow directly from the industrial undertaking itself and concluded that the interest earned by industrial undertaking on deposits with Electricity Board does not qualify for relief the order of the CIT(A) set aside Decided in favour of Revenue.
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