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2020 (1) TMI 1018 - AT - Income TaxEstimation of income of trading transaction in derivatives U/s 44AD - Non accepting the returned loss - whether converting a loss into estimated profit not only is unjustified but also, unwarranted as per the statutory provisions and the loss from trading transaction in derivatives deserves to be well recognized, accepted and has to be allowed - HELD THAT:- When the Assessing Officer without disputing the amount of equity loss has stated in the said gain/loss statement issued by the share broker as on 31.3.2016, then the amount of loss from other share transaction cannot be disallowed or disbelieved. On estimation of profit @ 8% by the AO, it is of the view that this action is baseless, meaningless and has not been supported by any documents or corroborative evidence. Therefore, such kind of estimation cannot be held as sustainable and thus,demolish the same. Respectfully following the proposition rendered by ITAT Delhi in the case of Felex Enterprises Pvt Ltd [2013 (9) TMI 1247 - ITAT DELHI], direct the Assessing Officer that the amount of ₹ 22,30,251.19 should be allowed to the assessee as normal business loss. Disallowance of set off of business loss U/s 71 - HELD THAT:- AO has wrongly estimated the net income of the assessee and was not correct in treating the loss as speculative loss and same has to be treated as normal business loss. Therefore, as per provisions of section 71(1) of the Act, where in respect of any assessment year, the net result of the computation of income under any head of income, other than ‘capital gains’, is a loss and the assessee has income assessable under the head ‘capital gains’ such loss may, subject to the provisions of the Chapter -VI, be entitled to, if the amount of such loss set off against his income, if any, assessable for that assessment year under any head of income. Therefore, keeping in view the said subsection( 1) of Section 71 direct the Assessing officer to allow set off the loss incurred by the assessee from trading transaction in derivatives from other heads of income. Accordingly, the Assessing Officer is directed to recalculate the taxable income of the assessee. Ground No.3 is allowed.
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