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2016 (5) TMI 585 - AT - Income TaxSet off of loss from one source against income from another source under the same head of income - adjustment of non-speculative business loss incurred on F & O derivative trading business - Held that:- On perusal of the Section 71 of the Act , it is observed that it deals with set-off of losses incurred under one head of income against another head of income. The language of Section 71(2) of the Act is plain and clear and it allows the losses incurred under any head other than under the head ‘capital gains’ to be set off against income under any other head of income including head ‘capital gains’. The language is clear and plain and we do not see any bar or prohibition on adjustment of losses incurred by the assessee in F & O trading business against the short term capital gains earned by the assessee on sale of shares and other income earned by the assessee except salary income as there is a specific bar and prohibition raised by the statute by virtue of Section 71(2A) of the Act which debar adjustment of losses incurred under the head ‘Profits and gains of business or profession’ to be set off against salary income. Section 71(2A) has a non-obstante clause and creates a bar notwithstanding what is contained in Section 71(1) and 71(2) of the Act. The assessee has incurred losses in F & O trading in derivatives which is assessable as non-speculative business loss under the head ‘Profit and Gains of business or profession’ and bar as contained in Section 71(2A) of the Act shall operate and the assessee will not be entitled to set off losses in F & O derivative trading business against salary income earned by the assessee , while assessee will be entitled to set-off such losses in F & O derivative trading business losses which are non-speculative business losses against capital gains on sale of shares and other income earned by the assessee except salary income Belated return filed - Held that:- Assessee did not file return of income with Revenue with-in due date stipulated u/s 139(1) of the Act , rather the return was filed belatedly u/s 139(4) of the Act. Provisions of Section 139(3) of the Act read with Section 80 of the Act ,post amendment by the Direct Tax Laws (Amendment) Act ,1987 w.e.f. 01-04-1989, clearly stipulate that for losses sustained by the tax-payer under the head ‘Profit and gains of business or profession’ or ‘Capital gains’ whereby the tax-payer claims to take benefit of carry forward of such losses u/s 72(1),73(2) , 74(1),74(3) or 74A(3) of the Act , the tax-payer has to file return of income as per provisions of Section 139(1) of the Act within due date specified in Section 139(1) of the Act and any non-compliance will disentitle carry forward of such losses by virtue of Section 139(3) read with Section 80 of the Act. The recourse in such a case is to approach CBDT u/s 119 of the Act for allowability of carry forward of such losses which are claimed vide belated return of income filed with Revenue. Admittedly, the assessee in the instant case did not file return of income within due date as prescribed u/s 139(1) of the Act and hence , the assessee will not be allowed to carry forward un-adjusted business loss arising from F & O derivative trading business chargeable to tax under the head ‘Profit and gain of business or profession’ which remained un-adjusted after adjusting the same under the other heads of income except salary income , as per our decision in preceding para’s
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