Genuineness of derivative losses failed where premeditated option trades created artificial losses without cogent rebuttal evidence.

Derivative-trading losses were treated as non-genuine where options were acquired shortly before expiry and allowed to lapse in nearly every transaction, and the broker admitted involvement in organised premeditated trades designed to generate artificial losses. Contract notes, registered-broker execution and banking-channel payments did not independently establish genuineness after the Revenue's investigation shifted the evidentiary burden to the assessee. The notes state that the assessee failed to provide cogent rebuttal material, including broker evidence, and that cross-examination was not an absolute right in these circumstances. The claimed derivative loss was therefore disallowed.

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Issues: Whether the derivative-trading loss claimed by the assessee was genuine and allowable.

Analysis: The derivative options were acquired shortly before expiry and allowed to lapse, resulting in losses in nearly every transaction. The broker involved had admitted to participating in organised, premeditated trades intended to create artificial derivative losses. Contract notes, execution through a registered broker and banking-channel payments did not, by themselves, establish genuineness once the Revenue's investigation shifted the burden to the assessee. The assessee did not produce cogent rebuttal material, including evidence from the broker, to displace the investigation findings. The right of cross-examination was not absolute on these facts.

Conclusion: The derivative-trading loss was not genuine and its disallowance was upheld against the assessee.

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