Derivative loss set off against interest income

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Sachin

Others

25 Points Posted on 28 May 2014

For AY 2011-12 my CA set off derivative loss against interest income. This return was rejected by CPC stating that – “In SCH PART –B-T1 the assessee has claimed set off current year loss. For example assessee has not filled the SCH P&L however there is claim of current year business loss OR without filing the details of sale consideration and cost of acquisition has claimed capital gains loss, the system has correctly not allowed these losses as there is no basis for the same. Further as per Sec 73 of the IT Act set off of speculation loss against non speculation business income is not allowable”. As a result a tax demand is generated. Multiple rectification requests filed without making any changes to the return were rejected by CPC. Appreciate if someone could help with how to resolve this issue so that tax demand goes away.

Replies (5)

Yogesh Shah

Managing Corporate Finance

809 Points Posted on 28 May 2014

Hi Sachin.. Time limit for revising the ITR is over now.. You can do one thing - you personally meet that Assessing Officer and ask him about application to be made to concerned Commissionerate.. Because he has this authority to do the needful even if time limit is over

Mahendra

Student

38 Points Posted on 28 May 2014

Agree with Yogesh...

Sachin

Others

25 Points Posted on 29 May 2014

Hi Yogesh and Mahandra.

Thanks for the resposne. As a matter of fact CPC support team told me to file a rectification request after revising the return and did not mention about any time limit as such. The bigger question is the way my CA set off derivative loss against interest income is correct or not and if it is correct how to fix it so that CPC accepts the retunrn and tax demand goes away.

Thanks,

Sachin

Yogesh Shah

Managing Corporate Finance

809 Points Posted on 31 May 2014

Hi Sachin.. Treatment of setting off derivative loss against interest income is totally wrong.. It's speculative loss and can be set off against speculative income only.. Time limit for revising ITR is 1 year from the end of assessment year (hence time limit is over)

Sachin

Others

25 Points Posted on 01 June 2014

Thanks Yogesh. However this return was prepared and filed by professional CA with 18+ years of experience so it is higly unlikely he ended up making a mistake like that. I am trying to understand why CPC rejected it and how to fix it. I am planning to get in touch with local AO to get this rectified.