Loss of FD Investments is Capital Loss Not a ‘Trading Loss’: Telangana HC Upholds Disallowance of Deduction Claim u/s 28 Of Income Tax Act

The Telangana High Court has ruled that losses arising from the redemption of fixed deposits (FDs) should be classified as capital losses and not as trading losses. This decision followed a challenge to a tax department ruling that disallowed a taxpayer’s claim for a trading loss under Section 28 of the Income Tax Act. The court held that FDs are investments, and any losses from them must be treated as capital losses, thus not eligible for deduction under the business loss provisions of Section 28. This ruling provides clarity for taxpayers who may have similar claims related to FD investments.