2012 (3) TMI 480 - AT - Income Tax

Tribunal decisions on income classification and derivative losses.

Mr. Nalin V. Shah Versus. ACIT Circle 4 (2) & vice versa

Mr. Nalin V. Shah Versus. ACIT Circle 4 (2) & vice versa - TMI Issues involved: Determination of whether an amount should be treated as business income or short term capital gain, and treatment of loss from derivative transactions as speculative or non-speculative.ITA No. 2741/Mum/2009:The Assessing Officer treated an amount as business income instead of short term capital gain. The CIT(A) upheld this decision, leading to an appeal. The appellant argued that the findings were not based on record and provided details to support the claim of being an investor. The Departmental Representative contended that the orders were in accordance with the law. The Tribunal noted that the distinction between stock investments as business income or short term capital gains depends on the facts of each case. They found that the holding period of shares was crucial, and since this was not adequately considered by the lower authorities, the case was remanded back to the Assessing Officer for a fresh decision.ITA No. 385/Mum/2009:The appellant claimed a net derivative loss as a business loss, which the Assessing Officer disallowed for set off against business income. The CIT(A) held that the loss from derivative transactions should be treated as notional speculative business loss. The revenue appealed this decision. The Departmental Representative argued that the CIT(A) had erred in reversing the Assessing Officer's order. The appellant cited a previous ITAT Mumbai order to support their position. The Tribunal found that the issue raised by the revenue was no longer res-integra as per a previous decision, and therefore, the appeal was rejected.The ITAT Mumbai allowed ITA No. 2741/Mum/2009 for statistical purposes and dismissed ITA No. 3856/Mum/2009.