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Income Tax Appellate Tribunal, “E” Bench, Mumbai
Before: Shri B.R. Baskaran (AM)& Shri Ramlal Negi (JM)
O R D E R Per B.R. Baskaran (AM) :-
The appeal filed by the assessee is directed against the order dated 13.9.2011 passed by the learned CIT(A)-7, Mumbai and it relates to A.Y. 2008- 09.
In the original grounds of appeal, the assessee has challenged the decision of the learned CIT(A) in upholding the loss of ` 1.34 crores arising in valuation of stock of shares as speculation loss u/s. 73 of the Act. The assessee has also raised an additional ground, which is without prejudice to the original ground, wherein the assessee has contended that the income earned from derivative trading should also be treated as speculative in nature in view of Explanation to section 73 of the Act.
We have heard the parties and perused the record. The assessee- company engaged in the business of trading in shares and is also engaged into
2 Trapu Investments P. Ltd. derivative transaction in shares and securities. The assessee declared loss from share trading transactions at ` 1.34 crores and claimed the same as business loss. The Assessing Officer placed reliance to Explanation 1 to section 73 of the Act and also decision rendered by Hon'ble Calcutta High Court in the case of M/s. Eastern Aviation and Industries Ltd. Vs. CIT (208 ITR 1023) and held that the loss suffered by the assessee-company in share transaction shall be assessed as speculation loss. Accordingly, he assessed the loss of ` 1.34 crores as speculation loss. In the appellate proceedings, the learned CIT(A) confirmed the order passed by the Assessing Officer by following the decision rendered by Hon'ble Bombay High Court in the case of CIT Vs. Lokmat Newspapers Pvt. Ltd. (322 ITR 43). Aggrieved, the assessee has filed this appeal before us.
Learned AR submitted that the Explanation 1 to section 73 of the Act has been amended w.e.f. 1.4.2015 and as per the amended provisions, loss claimed by the assessee should be treated as business loss only.
When learned Departmental Representative submitted that the amendment has been made from 1.4.2015 and hence shall not be applicable to the year under consideration, learned AR submitted that the Coordinate Benches of the Tribunal has held in the following cases that the amendment made to Explanation 1 shall be retrospective in nature :-
(a) Fiduciary Euromax Global Markets Ltd. (ITA Nos. 1349/M/2012 & 955/M/2014 dated 29.6.2016
(b) M/s. Kingpin Investment & Finance Pvt. Ltd. (ITA Nos. 309, 1717 & 1718/Mum/2007 dated 20.7.2016)
(c) Fiduciary Shares & Stock (P) Ltd. (159 ITD 554)
However, learned AR fairly admitted that Hon'ble Calcutta High Court has held in the case of Principal Commissioner of Income Tax Vs. M/s. Snowtex Investment Ltd. (GA No. 1695 of 2016 ITAT No. 199 of 2016 dated 22.11.2016) that amendment made to Explanation 1 shall not have retrospective effect.
3 Trapu Investments P. Ltd.
Learned Departmental Representative on the contrary, placed strong reliance on the order passed by the learned CIT(A).
Having heard the rival submissions, we are of the view that the order passed by the learned CIT(A) does not call for any interference as the learned CIT(A) has followed the decision rendered by Hon'ble Bombay High Court in the case of Lokmat Newspapers Pvt. Ltd. (supra). With regard to the amendment made to Explanation 1 to section 73 of the Act by the Finance (No.2) Act, 2014 w.e.f. 1.4.2015, we notice that the Hon'ble Calcutta High Court has held in the case of Snowtex Investment Ltd. (supra) that the said amendment will have prospective effect. In view of the order passed by Hon'ble Calcutta High Court, we are of the view that the assessee cannot place reliance on the order passed by the Tribunal on this matter.
The assessee has taken an alternative ground to treat the profit/loss arising from derivative transactions as speculative in nature, without prejudice to its original stand. In this regard, learned AR placed reliance on the order passed by Hon'ble Delhi High Court in the case of CIT Vs. DLF Commercial Developers Ltd. (261 ITR 127). Since this issue has been raised for the first time before the Tribunal, we are of the view that this issue requires examination at the end of the Assessing Officer. Accordingly, we restore this issue to the file of the Assessing Officer with the direction to examine the same in accordance with the law after affording necessary opportunity of being heard to the assessee.
In the result, appeal filed by the assessee is treated as partly allowed.
Order has been pronounced in the Court on 19.4.2017.