TRAPU INVESTMENTS P.LTD,MUMBAI vs. DCIT CIR 3(3), MUMBAI

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

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 :-

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.