TMI Blog2016 (5) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from any other source earned by the appellant for the year. 2. The learned CIT(A) gravely erred in not specifically dealing with the above ground and in not passing any speaking order in respect of the above ground. 3. In the facts and circumstances of the case and in law the learned CIT(A) erred in not holding that the assessment in appeal made u/s 147/148 was bad in law and was not tenable. The learned CIT(A) also erred in not holding that the notice issued u/s 148 was in itself bad in law as it was issued for reasons that would not justify initiation of reassessment. 4. The learned CIT(A) erred in holding that ground related levy of interest u/s 234A/234B and 234C was consequential in nature. It is submitted that in the facts and circumstances of the case and in law no interest was leviable u/s 234A/234B and 234C. 5. Without prejudice to the ground No. 1 the learned CIT(A) erred in not allowing carry forward of loss incurred in F O segment of the stock market. 3. The brief facts of the case are that the assessee has declared income from salary , rental income, business income from trading in Futures and Option Market , short term capital gains and income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin prescribed due date. Further , in view of provisions of Section 71(2A) of the Act, set off of loss on Futures and Options business was also not allowed to be set-off against salary income of the assessee. The AO passed reassessment order dated 29-11-2011 u/s 143(3) read with Section 147 of the Act disallowing the afore-stated claims of the assessee. 5. Aggrieved by the re-assessment order dated 29-11-2011 u/s 143(3) read with Section 147 of the Act passed by the AO, the assessee filed first appeal before the CIT(A). 6. The assessee submitted that in view of provisions of Section 71(2) of the Act , the claim of the assessee for set off of short term capital gains on shares earned by the assessee against the loss incurred in the Future and Option derivative trading business of the assessee is to be allowed. The assessee submitted that in view of provisions of Section 43(5)(d) of the Act , Future and Option derivative trading loss is a non-speculative business loss assessable under the head Profit and gains of business or profession . Thus, the assessee submitted that as per provisions of Section 71(2) of the Act , the assessee claim for set off F O derivative trading b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains of business or profession as non-speculative business income (loss) and can be set off against income earned under the other heads of income except salary income. 9. Ld. DR on the other hand relied upon the orders of the authorities below. 10. We have considered the rival contentions and perused the material on records. We have observed that the assessee has incurred loss of ₹ 55,14,313/- in Futures and Options derivative trading business. In view of the provisions of Section 43(5)(d) of the Act, the said loss is a non-speculative business loss provided conditions stipulated u/s. 43(5) of the Act are fulfilled which is not in dispute in present appeals as per the facts emanating from records. The dispute is with respect to adjusting the said non-speculative business loss of ₹ 55,14,313/- incurred on F O derivative trading business against the short term capital gains on sale of shares of ₹ 48,39,634/- earned by the assessee . We have observed that the said setoff is denied to the assessee in view of Section 70(1), (2) and (3) of the Act while the assessee is relying on Section 71(2) of the Act. We have carefully analyzed the provisions of said secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he net result of the computation under the head Profits and gains of business or profession is a loss and the assessee has income assessable under the head Salaries , the assessee shall not be entitled to have such loss set off against such income.] (3) Where in respect of any assessment year, the net result of the computation under the head Capital gains is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to have such loss set off against income under the other head.] [(4) Where the net result of the computation under the head Income from house property is a loss, in respect of the assessment years commencing on the 1st day of April, 1995 and the 1st day of April, 1996, such loss shall be first set off under sub-sections (1) and (2) and thereafter the loss referred to in section 71A shall be set off in the relevant assessment year in accordance with the provisions of thatsection.] On careful perusal of Section 70 and 71 of the Act , it is observed that the said Section 70 of the Act deals with set-off of losses under the same head of income while in the instant case Losses incurred by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 which is beyond the time stipulated u/s 139(1) of the Act, while the assessee was required to file the same by 30-09-2008 i.e. the due date stipulated u/s 139(1) of the Act. Thus, the 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 retur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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