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Set off losses of future and options

Sunil (Student) (48 Points)

30 October 2016

Please suggest, whether the decision of CIT vs. DLF Commercial Developers Ltd is also applicable on individuals who are dealing in the F&O transactions and set off the loss from business income of the current year. If there is any case law, which restricts the individuals to set off the loss from the F&O transactions to business income. Please suggest.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (173068 Points)
Replied 30 October 2016

"CIT vs. DLF Commercial Developers Ltd is also applicable on individuals?" Not applied till date.

On the contrary in case of Seema Jain vs. ACIT 6 ITR (Trib) 488 (Del) ::: the verdit::

"profit or loss from derivative trading will not be speculative profit or loss, therefore, the same will be eligible to be set off against the business income carried out by the assessee"

2.Dy. CIT vs. SSKI Investors Services (P) Ltd. (2008) 113 TTJ (Mumbai) 511 ITA No.2181 & CO 241/Del/2012 Emperor International Ltd. 8

"Dealing in derivatives is a separate kind of transaction which does not involve any purchase and sale of shares and therefore loss on account of F & O transactions cannot be treated as speculative loss ".

In case of companies also:

1. Loss from dealing can not be deemed to be from “speculation” under Explanation to section 73 if company is not engaged in ‘business’ of shares dealing

CIT vs Oriental Instrument (Delhi) ITA 112/2000 dt.20/11/2013

In case of

2. "Few transactions as investor do not attract Sec. 73 Expl. as there was no ‘business’"

Standipack Pvt. Ltd. vs Commissioner of Income Tax & ORS, 350 ITR 251 (CAL)

Only single case available so far that of CIT vs. DLF Commercial Developers Ltd., otherwise its always treated as Non-speculative Business.

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