TMI Blog2020 (1) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limine. 2. For that, the estimation of income of trading transaction in derivatives U/s 44AD without accepting the returned loss, converting a loss into estimated profit not only is unjustified on the facts and in the circumstances of the case as contrary to legislative intentions 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. 3.For that, disallowance of set off of business loss U/s 71 is unjustified and unwarranted and devoid of any merit, being legitimate set off allowed by statute, deserves to be allowed in Toto. 3. The facts in brief are that the assessee is a salari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all the documents i.e. certified copy of consolidated ledger from broker, all bank statement (Uco Bank, SBI, ICICI and IOB) and certified gain loss statement from broker and reply to show cause notice and explaining every query raised in relation to loss, were submitted before the Assessing Officer. 7. Replying to above, ld DR submitted that since the assessee has not maintained books of accounts, the estimation done by the lower authorities is correct. 8. Heard the rival submissions and perused the record of the case. In this case, the assessee, in the relevant assessment year, was in the trading transactions in derivatives of ₹ 30,00,098/- but has not maintained books of account u/s.44AD of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and has to be allowed. Ld counsel has placed reliance on the order dated 20.9.2013 of ITAT Delhi B Bench in the case of ITO vs Felex Enterprises Pvt Ltd in ITA No.5129/Del/2012 for Asst.Year: 2007-08 and submitted that speculation loss from derivative transaction should be adjusted against profit by applying section 43(5)(c) (d) instead of section 73 r.w.s 73(1) of the Act. He also drew my attention towards relevant last para at page 4 of the order and submitted that the loss incurred on account of transaction in share futures on a recognized stock exchange is normal business loss and same cannot be treated as speculative loss. Ld A.R. also drew my attention towards page 3 of the paper book and submitted that this kind of loss state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of estimation cannot be held as sustainable and thus, I demolish the same. 13. Respectfully following the proposition rendered by ITAT Delhi in the case of Felex Enterprises Pvt Ltd (supra), I direct the Assessing Officer that the amount of ₹ 22,30,251.19 should be allowed to the assessee as normal business loss. Hence, Ground No.2 of the assessee is allowed. 14. Apropos Ground No.3 of the appeal, ld counsel submitted that the Assessing Officer has denied set off of business loss being legitimate set off allowed by the statute. Therefore, same may kindly be allowed. Ld counsel submitted that since the transaction carried out by the assessee is a non-speculative transaction, provisions of section 43(5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. On careful consideration of the rival submissions, first of all, I note that while allowing Ground No.2 of appeal of the assessee, I have reached to a logical conclusion that the Assessing Officer 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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