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TMI Blog2017 (1) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... the same to the income returned which the assessee failed to do so - Held that:- As per the accounting policy, which is followed consistently over the years and accepted by the department, the assessee is recognizing the mark to market loss, which is the actual loss on carrying amount of investment. As per prudent norms, it is recognized as loss. Since, assessee is following the accounting method, it amounts to actual loss and cannot be termed as ‘provision’. The term ‘Provision” is something which cannot be ascertained as per the information available at the year end. But in this case, assessee has proper information and ascertained the loss at the year end, which is different from ‘provision’. As per the facts of the case, assessee is el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of shares under the head income from business , the facts are that the assessee company derives income from providing finance against securities and in dealing in shares and securities. The company has large stock of shares and deals in the same regularly. In its return of income the assessee had declared short term capital gain of ₹ 57,58,188/- on account of sale of shares. The AO found that the transactions pertained to the main business of the assessee and as such there was no investment involved. By giving the following reasons, the AO assessed the income under the head income from business : i) The assessee has itself submitted during the course of assessment proceedings that the company's primary business is to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely covered by the decision of the coordinate bench of ITAT Hyderabad in assessee s own case for AY 2008-09 in ITA No. 232/Hyd/2012, order dated 25/03/2013, a copy of which has been filed in the paper book at pages 13 to 19. 8. Ld. DR conceded to the submissions of the AR of the assessee. 9. Considered the rival submissions and perused the material facts on record. Similar issue came up for consideration before the Tribunal in assessee s own for AY 2008-09 (supra), wherein the coordinate bench has held as under: 8. We have heard both the parties and perused the record as well as gone through the orders of the authorities below. The Assessee is in the business of providing finance by way of loans against securities. They are not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m capital gains and not as income from business. Further, we wish to make it clear that it is not our opinion that in every case income earned from sale of shares is to be treated as capital gain. It all depends upon the facts and circumstances of respective case. We also make it clear that our finding in earlier paras is relating to this assessment year only and the assessee cannot make any plea that in all subsequent assessment years also the income is to be assessed under the head income from capital gains . As the issue under consideration is materially identical to that of AY 2008-09, respectfully following the same, we direct the AO to assess the profit on sale of the shares as short term capital gains and not as income from busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounted for the loss in the value of closing stock. This value has been taken as opening stock value in the next AY i.e. AY 2010-11. He submitted that if this amount is added in the current AY then the same amount should be added to the loss of the next AY 2010-11. The total loss incurred in derivatives in the AY 2010-11 was ₹ 6,55,87,256/-. Further, it was submitted that as the assessee has already made the loss on equity stock option/index option of ₹ 84,95,856/-, the balance amount of ₹ 5,70,91,400/- was recognized under Schedule G in the balance sheet for the AY 2010-11 in Profit/loss on equity stock future/index future and the same was explained vide letter dated 21/12/2011 before the revenue authorities. The AR, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quity stock option/index option, provision is made for the mark to market loss as on balance sheet date however mark to market profit is not recognized on prudent basis. As per the above accounting policy, which is followed consistently over the years and accepted by the department, the assessee is recognizing the mark to market loss, which is the actual loss on carrying amount of investment. As per prudent norms, it is recognized as loss. Since, assessee is following the accounting method, it amounts to actual loss and cannot be termed as provision . The term Provision is something which cannot be ascertained as per the information available at the year end. But in this case, assessee has proper information and ascertained the los ..... X X X X Extracts X X X X X X X X Extracts X X X X
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