Tribunal held that the assessee-company had derived income from house property, capital gains and other sources, which collectively represented 69 per cent. of the gross total income of the assessee-company. This proved that the assessee’s gross total income mainly consisted of income from various heads. The case of the assessee squarely fell outside the ambit of the provisions of the Explanation to section 73. Therefore, the loss on derivative transactions was to be construed as regular business loss incurred by the assessee and eligible for set off against other business income. Relied on CIT v. Darshan Securities (P.) Ltd. (2012) 341 ITR 556 (Bom) (HC) and CIT v. HSBC Securities and Capital Markets India (P) Ltd. [2012 23 taxmann.com 377 (Bom) (HC). Tribunal held that since the loss incurred on derivative transactions was not speculative loss and treated as regular business loss, the Assessing Officer was to delete the disallowance. (AY.2011-12).
Megha Property Developers Ltd. v. ITO (2020) 84 ITR 406 (Mum.) (Trib.).
S. 73 : Losses in speculation business-Futures and options derivative transactions-Deriving 69 Per Cent. of its gross total income from various heads-Explanation is not applicable-Business loss and can be set off against other business income-Derivatives carried out in recognised Stock Exchange through registered stock broker-Transaction not deemed to be speculative transaction-Eligible to be set off-Apportionment of expenditure is directed to be followed. [S. 28(i), 43(5)(d)]