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vishal kapoor

50 Points Posted on 17 January 2013

Hi, the assessee was working as a sales manager in icici prudential life insurance and drawing a salary of rs 6 lac per annum and the assessee has suffered a loss in derivative market of rs 600000 approx. the assessee has not filed his income tax return in that financial year but after receiving a notice u/s 148 , return is filed with interest. Now the case is selected for scrutiny u/s 143(2)and AO want to make a addition of Rs 200000/- u/s 68(unexplained cash credit). My question is that if AO makes the addition of RS 200000/- can i get the benefit of Set off from my business loss of Rs 600000/-. because the business is set off against any other income except income from salary. Thanks

Replies (4)

CA Neha Chauhan

Chartered Accountant

485 Points Posted on 17 January 2013

Dear Vishal,

You can not set off the Speculation loss to normal business profit..... (Section 73)

Regards,

Neha Chauhan

vishal kapoor

50 Points Posted on 17 January 2013

Dear Neha ji, As per Sec 43(5)clause d, derivative trading is not a speculation loss, it is a business loss.

Kulwant Singh Khalsa

CA STUDENT

106 Points Posted on 17 January 2013

as per my knowledge, you cannot claim setoff of the said amount with loss as you have not filed your return of income within time limit as specfied u/s 139(1)

Nikhil Kaushik

Fellow CA

70840 Points Posted on 18 January 2013

Dear Vishal,

I believe for multiple reasons you won't be able to claim the set off including limitation pointed out by Kulwant. Also, you need to establish that the derivative loss borne by the assessee fulfills the conditions laid out in 43(5). Otherwise, it shall be treated as speculative loss only. Even of u are able to prove that section 139 will screw the case anyways.