Income Tax Tribunal Allows Mark to Market Loss Deduction for Equity Futures

The High Court upheld the decision of the Income Tax Appellate Tribunal that marked to market loss on open equity stock future contracts is a permissible deduction for the assessee. The Court found no infirmity in the judgment and dismissed the Special Leave Petition, closing any pending applications.

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Issues involved:
The issue involved in this case is whether the marked to market loss on open equity stock future contracts is a permissible deduction in the hands of the assessee.

The Commissioner of Income Tax (Appeals) held that the marked to market loss on open equity stock future contracts is a permissible deduction in the hands of the assessee. The Income Tax Appellate Tribunal (ITAT) rejected the Revenue's challenge on 21.12.2016, specifically dismissing the Department's contention that the market loss of stock in trade is not an ascertained liability. The ITAT relied on the case of United Commercial Bank, Calcutta v. Commissioner of Income Tax, W.B.-III, Calcutta reported in (1999) 8 SCC 338 to support its decision in favor of the assessee.

Upon considering the reasoning of both the forums, the High Court's impugned judgment was found to have no infirmity. Therefore, no interference was deemed necessary in the present matter. Consequently, the Special Leave Petition was dismissed, and any pending application(s) were closed.

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