Tribunal held that the asseeee is not registered broker on the stock exchange. Only the registered brokers can modify client code (CCM) of their own clients. the AO has not brought on record to establish that the losses were purchased or that there was payment in cash/cheque for such favors. AO has mechanically added amounts as income of the assessee without verifying the records. Tribunal also held that, by no stretch of imagination can any AO consider a transaction on the stock exchange as income of a person other than the one who has either actually received monies in his bank account (In case of profit) and /or paid any monies from his bank account (in case of loss) and nothing has been placed on record by the AO to demonstrate that any proceedings were ever initiated against the assessee by the SEBI or any stock exchange. Client code modification with in 1% of is absolutely normal Accordingly the loss is held to be allowable as business loss. (ITA No 5689 /Mum/2017 dt 13-05 2019 ) ( AY. 2010-11)
DCIT v. Comet Investment Pvt. Ltd. (Mum.) (Trib.) www.itatonline.org
S.28(i): Business loss- Future and options- Shares and derivatives – Client code modifications (CCM) – No stretch of imagination can any AO consider a transaction on the stock exchange as income of a person other than the one who has either actually received monies in his bank account (In case of profit) and /or paid any monies from his bank account (in case of loss) – burden is on AO to establish that the losses were purchased or that there was payment in cash/cheque for such favors . Client code modification with in 1% of is absolutely normal [S. 143(3)]