Set off derivatives loss against interest income

SHASHANK AGARWAL (self employed) (114 Points)
Replied 03 March 2014

Now this is a case of mistake in adjustments made in intimation u/s 143(1) of the IT Act.

This can be easily rectified by :

1. Either appeal against the same in CIT(Appeals) within 30 days of date of intimation.

or

2. Appeal to CIT u/s 264 within 1 Year form the date of intimation.

for more queries : https://knowyourtaxation.blogspot.in/

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sachin (Others) (79 Points)
Replied 04 March 2014

Thanks Shashank. As I understand you are saying there is mistake in intimation u/s 143(1) of the IT Act. However I am still not sure if the derivative loss set off aginst interest income was correct or not. Can you please also provide more help on how to rectify it using CIT (appeals) as I am pretty new in this area. My CA who filed this return is still insisting that it is the correct way he filed the return and trying to run away from all this so doing it on my own. Thanks and appreciate your help again.

SHASHANK AGARWAL (self employed) (114 Points)
Replied 04 March 2014

Mr Sachin, I have few points to say in your case which may help you : 1. First of all, As per ammendment by finance act 2005, any derivative transaction in shares carried out via a recognised stock exchange is NOT to be termed as speculation business but a Non Speulative Business. 2.Secondly Interest income from Bank, FDs and NSC is taxable in head "Income from Other Sources". However a business loss can be set off against it. 3. Thirdly : To file an appeal ,there is precribed procedure which will be quite difficult to follow without the help of a Chartered Accountant. Hence I would ask you to file the appeal through a Practicing CA. Various documents required for the appeal are : i. Form No. 35 ii. Memorandum Of Appeal iii. Statement Of Facts iv. Grounds Of Appeal v. Copy of Intimation u/s 143(1) vi. Original copy of Notice of Demand vii. Challan copy of Prescribed fees for filling. Feel free to raise any further query and i will try and resolve the same. for more information and queries : https://knowyourtaxation.blogspot.in/ Read more at: /forum/set-off-derivatives-loss-against-interest-income-283417.asp#.UxV0xfmSxqV

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SHASHANK AGARWAL (self employed) (114 Points)
Replied 04 March 2014

Mr Sachin, I have few points to say in your case which may help you : 1. First of all, As per ammendment by finance act 2005, any derivative transaction in shares carried out via a recognised stock exchange is NOT to be termed as speculation business but a Non Speulative Business. 2.Secondly Interest income from Bank, FDs and NSC is taxable in head "Income from Other Sources". However a business loss can be set off against it. 3. Thirdly : To file an appeal ,there is precribed procedure which will be quite difficult to follow without the help of a Chartered Accountant. Hence I would ask you to file the appeal through a Practicing CA. Various documents required for the appeal are : i. Form No. 35 ii. Memorandum Of Appeal iii. Statement Of Facts iv. Grounds Of Appeal v. Copy of Intimation u/s 143(1) vi. Original copy of Notice of Demand vii. Challan copy of Prescribed fees for filling. Feel free to raise any further query and i will try and resolve the same. for more information and queries : https://knowyourtaxation.blogspot.in/

sachin (Others) (79 Points)
Replied 04 March 2014

Thank you very much Shashank for detailed explanation. This return was filed online with CPC Bangalore and looks like the appeal needs to be filed physically with local tax office. Since CPC did not consider the derivative loss there is tax demand. Is there any alternate way to fix this issue? Appreciate your valuable inputs so that I am prepared before I go to CA to close this.

SHASHANK AGARWAL (self employed) (114 Points)
Replied 04 March 2014

Only possible remedies are appeal against Intimation to CIT (Appeals) or CIT. And yes also take a stay order against the demand from the AO or else you may be classified as Assessee in default and liable to pay penalty and interest u/s 220 and 221.

And also the appeal is need to be filed physically at the office of IT dept in your city, by going to the office of the ward where your file belongs.

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