Gold Silver Reports — NSEL Investors and Entities Receive Tax Notices — Investors and entities who lent them money to trade on the now defunct National Spot Exchange (NSEL) are facing heat from tax authorities. Some of the 13,000 investors have received notices from the income-tax department seeking details, among others, of source of funds, bad debt claimed during assessment years 2014-15 and 2015-16 and of investments made in NSEL. This was confirmed after investor forum NSEL Aggrieved and Recovery Association, or Naara, tweeted that the tax authorities’ action emanated from a complaint by NSEL, which itself was a “rogue entity“.
While forum officials said the tax authorities were well within their rights to open scrutiny of any assessee, they are irked by what they claim is “action initiated upon the complaint (letter) of a rogue entity“.
Dated June 27, the letter, which ET reviewed, terms the claims by traders, brokers, and their nonbanking finance companies “illegal“, “multiple“ and for “bogus . 2,000-3,000 crolosses“. It said the ` re worth claims were causing losses to the exchequer.
An NSEL spokesperson said, “It is surprising that traders and fo rums are upset over the I-T notices and are considering the same as harassment to traders, especially, when the black money (allegedly) seems to have been deployed for trading on the (NSEL) platform.We fail to understand why they are so upset when they claim of having done nothing wrong. “While on one hand, they said it is the deposits and they filed affidavits, why are they conveniently claiming themselves as traders?
Traders on NSEL consider themselves “investors“, it is clear that any investment loss, being capital loss, can only be claimed for set-off against capital gains (their claims of loss of outstanding amount, is not lawful and tenable under I-T Act); on the other hand, they have proffered to claim huge amounts . 5,000 crore.“
as loss, in regions of ` However, investors argued that when they purchased contracts on NSEL, they took delivery of goods in NSEL approved warehouses.The money they paid for the goods was used by defaulters and returned after 25-36 days with 14-16% return. When payouts stopped after July 2013, the principal amount invested was stuck. Therefore, investors sought to adjust this loss against business gain in subsequent fiscal years, which was being allowed by the tax department. As and when they begin receiving payouts of their principal, the carried forward losses would be adjusted accordingly, leading to no loss to the exchequer. — Neal Bhai Reports