Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (6) TMI 401 - ITAT CHENNAIDisallowance u/s 14A r.w.r. 8D - suo-motu disallowance made by assessee - Necessity of recording satisfaction - HELD THAT:- AO, without recording any objective satisfaction as to why said disallowance was not acceptable, straightway applied Rule 8D(2) which run contrary to statutory provisions of Sec.14A r.w.r.8D(2). Before applying the said rule, it was incumbent upon Ld. AO to record an objective satisfaction rejecting the computations made by the assessee. In the absence of such an exercise, the additional disallowance made by Ld. AO could not be sustained in law. This ground stand allowed. Treatment of Losses as Speculative Losses - adjustment of loss under arbitrage transactions - HELD THAT:- One of the eligible transactions includes trading in derivatives because of systematic technological changes introduced by stock exchanges. Trading business of the assessee constitutes only profit / loss in arbitrage / jobbing which are normal business transactions for the assessee. Under Arbitrage transaction, the assessee makes riskless profit by exploiting the price differentials on the same instrument or on the similar assets by trading on different exchanges. Under these transactions, when there is loss in one market, there will be profit in another market or segment or vice versa. Hence the loss in cash market is arbitrage loss & the profit in F&O segment is also the very same arbitrage profit and vice-versa, which has arisen on the arbitrage / jobbing transactions carried on by the assessee. These two types of transactions, in our opinion, are the two sides of the same coin and could not be treated separately. The loss of one segment has to be allowed to be set-off against the other segment. In the case of the assessee, the entire transaction of purchase and sale of securities constitutes arbitrage & jobbing transactions as a whole and hence, these transactions are outside the purview of the speculative transaction. The explanation to Sec.73 would not apply to the case of the assessee in view of specific exclusions of the arbitrage/jobbing transactions from the purview of speculative transaction u/s 43(5) - AO is directed to re-compute the income of the assessee. This ground of appeal stand allowed.
|