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2017 (1) TMI 1088 - AT - Income TaxSale of shares - short term capital gain OR income from business - Held that:- As the issue under consideration is materially identical to that of AY 2008-09, respectfully following the same, we direct the AO to assess the profit on sale of the shares as short term capital gains and not as income from business. Accordingly, this issue is decided in favour of the assessee. Disallowance for loss on equity stock option - AO disallowed the same by observing that the assessee company had debited to P&L A/c a provision for loss on equity stock option/index option, the assessee ought to have added back the same to the income returned which the assessee failed to do so - Held that:- As per the accounting policy, which is followed consistently over the years and accepted by the department, the assessee is recognizing the mark to market loss, which is the actual loss on carrying amount of investment. As per prudent norms, it is recognized as loss. Since, assessee is following the accounting method, it amounts to actual loss and cannot be termed as ‘provision’. The term ‘Provision” is something which cannot be ascertained as per the information available at the year end. But in this case, assessee has proper information and ascertained the loss at the year end, which is different from ‘provision’. As per the facts of the case, assessee is eligible to claim the loss on stock options and accordingly, ground raised by the assessee is allowed.
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