PCIT Vs Dewa Projects Pvt Ltd (Kerala High Court)
Kerala High Court held that a loss in the derivative business is a business loss for the purposes of Section 72, and thus a set off of such business loss would have to be permitted against profits and gains of business.
Facts- The respondent/assessee is a company engaged in property development and is currently under liquidation. During the previous year relevant to the assessment year 2007-08, the assessee had returned business income in connection with its property business but had also netted off a loss of Rs.803.03 lakhs, which was the carried forward loss from previous years in relation to its business of trading in derivatives. AO treated the loss of Rs.803.03 lakhs as speculative loss and, going by the provisions of Section 73 of the I.T. Act, found that the speculative loss could not be set off against other business income of the assessee. The assessment was completed accordingly by cancelling the set off and adding the amount of Rs.803.03 lakhs to the business income for the said year.
First Appellate Authority affirmed the order of Assessing Authority. Tribunal remitted the matter back to Assessing Officer with direction to bifurcate speculative loss and normal business loss. Being aggrieved, revenue has preferred the present appeal.
