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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI ABY T VARKEY & SHRI AMARJIT SINGH
Per Amarjit Singh (AM): The solitary ground of appeal of the assessee is directed against the order of ld. CIT(A) in confirming the action of assessing officer of denying set off of profit of F. & O. transactions and profit of non-delivery based share against brought forward business loss.
Fact in brief is that return of income declaring income at Rs.nil was filed on 25.09.2014. The assessment u/s 143(3) of the Act was completed on 15.12.2016. The assessing officer has treated the brought forward loss on the trading of F & O as speculative loss by invoking explanation to Sec. 73 of the Act and has not allowed the same to be set
P a g e | 2 ITA No. 783/Mum/2019 dated 17.10.2019 has dismissed the appeal of the assessee after referring the decision of Hon’ble Supreme Court in the case of Snowtex Investment Ld. Vs. CIT (105 taxman.com 282) dated 30.04.2019. Subsequently, the assesse has filed miscellaneous application against the above referred decision of ITAT and the ITAT vide M.A. No. 269/Mum/2022 dated 26.06.2023 recalled the above referred order of the ITAT dated 30.04.2019 holding that decision Hon’ble Supreme Court in the case of Snowtex Investment Ltd. (supra) does not apply to the case of the assessee as the said case was pertained to assessment year 2008-09 whereas the case of the assessee is pertained to assessment year 2014-15. The ITAT bench in the miscellaneous application order has also held that assesse did not have any speculative business or loss because assessee was in the business of trading in future and option in shares on the recognised stock exchange which was out of the speculative business definition in view of the provision of Sec. 43 sub-section (5)(d).
Heard both the sides and perused the material on record. Without reiterating the facts as discussed above we have perused the provision of Sec. 43(5) of the Act as per which loss in F & O transaction is not speculative loss. In this regard, we have also perused the decision of Hon’ble Calcutta High Court in the case of Asian Financial Services Ltd. Vs. Commissioner of Income Tax, Calcutta (2016) 70 taxman.com 9 (Calcutta) wherein held that loss incurred on account of derivatives would be deemed business loss under proviso to Sec.43(5) and not P a g e | 3 As such loss would be set off against income from business. We have also perused decision of ITAT, Mumbai in the case of M/s Sucom India Ld. Vs. JCIT vide ITA No. 6203/Del/2015 dated 05.10.2018 wherein after following the decision of Hon’ble Calcutta High Court as referred above held that loss suffered by assessee of derivative transaction is not speculative loss and same is eligible to be adjusted against the business income and explanation 73 of the IT Act is not attracted. Following the aforesaid decision we restore this issue to the file of the assessing officer for allowing the claim of set off after examination/verification that assessee has incurred loss from F & O transactions. Therefore, the appeal of the assessee allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 18.08.2023 (Aby T Varkey) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 18.08.2023 Rohit: PS
P a g e | 4 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. आयकर आयुक्त / CIT 3. 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि //// आदेशानुसार/ BY ORDER,
उि/सहायक िंजीकार (Dy./Asstt.