A taxpayer from Dampier Nagar, Mathura, made Rs 8.64 crore from his real estate trading business but lost about Rs 34 lakh in future and options (F&O) trading in the stock market. However, when he filed his income tax return (ITR), he declared the F&O loss as a business loss. However, F&O trading is typically viewed as speculative income/loss unless your main business is F&O. In this case, as mentioned earlier, the taxpayer’s main business is a real estate trading, from which he had earned crores of rupees.
As a result, the Income Tax Assessing Officer (AO) from I.P. Estate, New Delhi picked his ITR for scrutiny and treated the entire loss as speculative by invoking the Explanation to Section 73, thus denying its off-set against the taxpayer’s regular business income. The AO based his decision on the Delhi High Court’s ruling in CIT v. DLF Commercial Developers Ltd.
