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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI AMARJIT SINGH
Date of Hearing 25.05.2022 Date of Pronouncement 15.06.2022 आदेश / O R D E R Per Amarjit Singh (AM): The present appeal filed by the revenue is directed against the order passed by the ld. CIT(A), NFAC, Delhi, which in turn arises from the order passed by the A.O. u/s 143 r.w.s 147 of the Income Tax Act, 1961, for A.Y. 2010-11. The revenue has raised the following grounds before us:
2 ITO, WD 2(2)(3) Vs. Plaza Securities ltd. “1. Whether on the facts and the circumstances of the case and in law, the Ld.CIT(A) erred in not considering the loss in F&O segment us speculation loss, relying on the decision of ITAT, Ahmedabad, in the case of ITO Vs Upkar Retails Pvt. Ltd. (ITA No. 2237/Ahd/2014) notwithstanding that on similar issue Revenue has not accepted decision of the Calcutta high Court in Asian Financial Services Ltd. Vs. CIT (2017) 293 CTR 240 (Cal) and on which SLP is pending."
The fact in brief is that the assessee has filed return of income declaring a total loss of Rs.34,57,764/- on 31.03.2016. The return was processed u/s 143(1) of the Act. Thereafter assessment u/s 143(3) r.w.s 147 of the Act was completed on 31.03.2016. During the course of assessment the A.O has treated loss from F & O of Rs.1,72,18,187/- as speculation loss and same was not allowed to be set off against the non speculation income.
Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee and held that the loss in F & O segment cannot be considered as speculation loss after taking into consideration the amendment made in the Income Tax Act, w.e.f 01.04.2016. The ld. CIT(A) has also referred the decision of ITAT, Ahmedabad in the case of ITO Vs. Upkar Retail, vide order dated 18.06.2018 in ITA No. 2237/Ahd/2014. The relevant part of the decision of CIT(A) is reproduced as under: “23. The appellant had claimed loss of Rs.1,72,18,187.11 (About 1.72 Crores) in F & O trading and it was set off against trading income of Rs.216,17,066 41 (About 2.16 Crores). The AO has noted that the nature of trading income of Rs.2.16 was not explained. The AO disallowed loss of Rs.1.72 on the ground the loss from F & O transactions has to be treated as speculation loss in view of the decision in the case of CIT vs DLF Commerical Developers Ltd. (2013) 35 Taxmann.com 280 (Delhi). 24. The appellant has argued that the trading in F&O segment was not to be considered as speculative loss as per amendment in the Income Tax Act w.e.f. 01.04.2016. It is further submitted that Kolkata High Court has given judgment in favour of assesse after considering above stated judgment of Delhi High Court. It is also argued that ITAT Ahmedabad has considered judgment of both high court and decided in favour of assessee in the case of ITO vs Upkar Retail vide order 3 ITO, WD 2(2)(3) Vs. Plaza Securities ltd. dated 18.06.2018 in ITA No.2237/Ahd/2014. Several other judgment have been relied on by the Appellant. It is argued the case of DLF Commercial Developers Ltd. (supra) related to share transactions and not F&O transactions.”
Heard both the sides and perused the material on record. During the course of assessment the A.O has noticed that assessee has claimed F & O loss of Rs.1,72,18,187/-. The A.O has disallowed the claim of set off by treating the F & O loss as speculation loss. The ld.CIT(A) has allowed the claim of the assessee after following the decision of Hon’ble Delhi High Court and ITAT, Ahmedabad as discussed supra in his finding. The Finance Act, 2005 has amended section 43(5)(d) to provide that an eligible transaction in respect of trading in derivatives of securities carried out on a recognized stock exchange shall not be deemed as speculative transactions. In this regard we have also perused the decision of Hon’ble Bombay High Court in the case of Souvenir Developer (I) Pvt. Ltd. Vs The Union of India. The relevant part of the decision on similar issue and identical fact is reproduced as under: “42. In so far as judgment of Delhi High Court in case of the Commissioner of Income. Tax Vs. DLF Commercial Developers Limited (supra) relied upon by the learned counsel for revenue is concerned, the Delhi High Court has taken a view contrary to the view taken by this Court in case of Commissioner of Income Tax Vs. Shri Bharat R. Ruia (HUF) (supra). The Judgment of the Hon’ble Supreme Court in case of Snowtex Investment Limited (supra) was not brought to the notice of Delhi High Court while dealing with the case of Commissioner of Income Tax Vs. DLF Commercial Developers Limited. The said judgment of Delhi High Court would not advance the case of the revenue.
In our view, the Income Tax Appellate Tribunal could not have confirmed any addition on transaction in derivatives on recognised stock exchange as defined in Section 43(5)(d) of the Income Tax Act, 1961 with reference to explanation given to Section 73 of the Income Tax Act, 1961 which is applicable to speculative transaction. By virtue of insertion of clause (d) to the proviso to Section 43 (5) of the Income Tax Act, 1961, the transactions in respect of the trading in derivatives as prescribed in clause (d) inserted in proviso to Section 43(5) would not be a speculative transaction.” In view of the above facts and following the decision of the Hon’ble jurisdictional High Court as supra we don’t find any reason to interfere 4 ITO, WD 2(2)(3) Vs. Plaza Securities ltd. in the decision of ld. CIT(A), therefore, the ground of appeal of the revenue is dismissed.
In the result, the appeal of the revenue is dismissed.