A Kanpur man is making headlines after he received relief from the Income Tax Appellate Tribunal (ITAT) in a case involving a Rs 1.95 crore trading loss incurred through his wife’s account.
According to The Economic Times, the man, whose identity remains undisclosed, transferred funds to his wife’s account and used it to carry out Futures and Options (F&O) trading. The transactions resulted in a loss of Rs 1.95 crore during the financial year. When filing his income tax return, he reported the loss on his own return and adjusted it against his income.
However, the Income Tax Department challenged the claim and raised a tax demand, stating that the loss belonged to his wife’s account and therefore could not be adjusted against the husband’s income.
The dispute eventually reached the ITAT’s Lucknow Bench. After examining the facts, the tribunal found that the husband had transferred funds to his wife’s account, and that he carried out the trading through his wife’s account, and the loss occurred there.
The tribunal pointed out that, under the Income Tax Act’s clubbing rules, income generated from assets gifted or transferred to a spouse is typically included in the transferor’s income.
ITAT further observed that if the profits from such investments were clubbed, the losses should be treated in the same manner.
Taking this view, the tribunal granted relief to the taxpayer and allowed the loss of Rs 1.95 crore to be adjusted against his taxable income.
The post has gone viral, attracting widespread attention online.
One user wrote, “Future and option is complete gambling, why people can’t understand you can’t beat an exchange that has full power money capacity and data.”
Another person made a witty comment, “Your losses are your losses, but your profit is my profit.”
A third user asked, “Does it mean that if my wife is making a profit, then I will have to pay taxes?
