Revised Return Correcting F&O Loss Classification Must Be Considered: ITAT Mumbai

Kamal Ramprasad Gupta Vs DCIT (ITAT Mumbai)

Summary: The ITAT Mumbai considered whether the Assessing Officer was justified in disregarding a revised return filed under section 139(5) of the Income-tax Act, 1961, in which the assessee corrected the classification of loss arising from Futures and Options transactions from speculative business loss to non-speculative business loss and consequently recomputed the set-off and carry forward. For AY 2016-17, the assessee had originally filed its return on 02.09.2016 and disclosed the F&O loss, but inadvertently treated it as speculative business loss and claimed it for carry forward. On noticing the error, a revised return was filed on 17.11.2016 treating the F&O loss as non-speculative business loss, setting it off against income to the permissible extent and carrying forward the balance. The Tribunal noted that the aggregate business loss remained substantially the same—Rs. 1,26,05,069 in the original return and Rs. 1,26,05,073 in the revised return—while the amount claimed for carry forward actually reduced from Rs. 1,24,57,323 to Rs. 83,82,855. The AO rejected the revised treatment on the ground that a return claiming business loss ought to have been filed within the time prescribed under section 139(1), and the CIT(A) upheld the action relying on PCIT v. Wipro Ltd., 446 ITR 1 (SC).