TaxTMI 
TaxTMI 
2019 (11) TMI 268
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....broking business. For theAssessment Year 2015-16, they have filed their return of income on 27/11/2015 declaring nil income, however it is submitted that minimum alternate tax (mat) of Rs. 47,07,305/-was paid under section 115 JB of the Income Tax Act, 1961 (for short "the Act") on book profits. 3. During the course of assessment proceedings, learned Assessing Officer on a perusal of the profit and loss account ("P&L account"), noticed that the assessee had claimed deduction of mark to market losses (MTM). It was explained before the Assessing Officer that the assessee being a stockbroker and engaged in the business of trading in derivative segment by entering into future and options contracts, some of the future and options contracts co....
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.... when they accrue and on the other hand the assessee claimed deduction for losses which are not accrued as the contracts remain unsettled. He further observed that under the Income-tax Act, 1961, the assessee can claim the deduction for actual business losses or expenses as per different provisions and expected or notional losses/expenses cannot be allowed. Learned Assessing Officer further relied on the CBDT instruction dated 23/3/2010 and ultimately held that the MTM losses claimed by the assessee are not to be disallowed and added back to the income of the assessee. 6. In the appeal preferred by the assessee, Ld. CIT(A) while considering the issue as to whether such MTM losses are allowable as expenditure or the how to be disallowed o....
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....f the Tribunaland prayed to delete the addition of Rs. 6,73,566/-made by the learned Assessing Officer. 8. Per contra, Ld. DR submits that as rightly observed by the Ld. CIT(A) based on the decision of the Tribunal in Lally Motors (supra), CBDT instructions are binding on the Revenue authorities and since both the authorities below reached a conclusion that the claim of the assessee in respect of the MTM losses is only a notional loss and cannot be allowed, basing on the CBDT circular dated 23/3/2010, the impugned orders cannot be found fault with. 9. We have gone through the record in the light of the submissions made on either side. There is no dispute that the assessee is engaged in stockbroking business. It is also not in dispute ....
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....upra),the Mumbai Bench of the Tribunal considered the issue in question and a observed that,- "10.Next issue is about marked to market losses (MTM). The DR and the AR, agreed that identical issue had arisen in the earlier years and the tribunal had decided the issue in favour of the assessee, that the FAA had followed the order of the tribunal. We are reproducing the order of the tribunal and it reads as under"We have heard both the parties and perused the orders of the revenue authorities as well as cited decision of the tribunal and the relevant material placed before us. It is an undisputed fact that the derivatives, which are the subject matter of impugned MTM loss, are commodities of trading account. The same are treated on ex....