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Income Tax Appellate Tribunal, “A”, BENCH KOLKATA
Before: SHRI A.T. VARKEY, JM &DR. A.L.SAINI, AM
आदेश / O R D E R
Per Dr. A. L. Saini, AM:
Since there was a difference of opinion between the ld. Members constituting the Division Bench of ITAT, Kolkata with regard to the following questions, the matter was referred to Third Member u/s 255(4) of the I.T. Act for his opinion:
Whether the loss incurred on purchase and sale of shares in respect of delivery based transactions could be construed as speculation loss within the meaning of Explanation to Section 73 of the Act in the facts and circumstances of the case?
2 Lohia Securities Ltd. Assessment Year:2009-10 2. Whether the provisions of Explanation to Section 73 of the Act per se could be made applicable to the facts and circumstances of the instant case?
Hon’ble President, ITAT nominated Shri P. M. Jagtap, Hon’ble Vice President (KZ) as Third Member. The Hon’ble Third Member vide his order dated 01/10/2019 has concurred with the findings of ld. Accountant Member observing the followings:
“17. The legal position that emanates from the judicial pronouncements discussed above thus is that the Explanation to Section 73 does not differentiate between “delivery based transactions” and “derivative transactions in F & O segment” and the same applies to the entire business of purchase and sale of shares, whether such trading is delivery based or non-delivery based, whether there is profit or loss from such business. In the present case, the assessee- company has treated the entire activity of purchase and sale of shares, which comprised of both the delivery based and non-delivery based trading as one composite business and accordingly claimed set off of the loss incurred in delivery based trading against profit derived from derivative trading. If the ratio of the judicial pronouncements discussed above is applied to the facts of the assessee’s case, it follows that the aggregation of the share trading loss and profit form derivatives transaction should be done before application of Explanation to section 73 of the Act and since there was surplus profit on such aggregation, Explanation to section 73 would not be applicable. I, therefore, agree with the view taken by the ld. Accountant Member.
In the light of the above discussion, the matter may now be placed before the regular Bench for an appropriate order in accordance with law.” Therefore, in accordance with the majority view, the appeal of the assessee is allowed.
Order pronounced in the Court on 13.11.2019