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Income Tax Appellate Tribunal, JAIPUR BENCHES, ‘’SMC” JAIPUR
Before: Hon’ble SHRI SANDEEP GOSAINvk;dj vihy la-@ITA No. 214/JP/2018
ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A), Kota dated 11-12-2017 for the assessment year 2018-19 wherein the assessee has raised the following ground of appeal. ‘’1. That on the facts and in the circumstances of the case, the lower authorities grossly erred in disallowing the NCDEX Trading Loss in the amount of Rs.39,88,783/- out of total loss of Rs.56,14,805/- by treating the same as Speculation Loss. 1.1 That on the facts and in the circumstances of the case, the lower authorities grossly erred in not considering the submission made by the assessee that the proviso (e) to clause 5 of section 43 of the Income Tax Act is applicable from 01-04-2013. Delay in notifying the NCDEX as exchange, cannot nullify the legislative mandate of the enactment. Delay was attributable to the Central Board of Direct Taxes who had failed to issue necessary notification within time.
2. That on the facts and in the circumstances of the case the lower authorities grossly further erred in disallowing Rs,.38,000/- out of total expenses amounting to Rs.1,89,567/-, comprising of car expenses Rs.92,814/-, shop expenses Rs.34,267/-, Staff tea expenses Rs.34,121/- and telephone and mobile expenses Rs.28,365/- claimed by the assessee.
3. That the AO also erred in charging interest u/s 234A and 234B and the ld. CIT(A) erred in confirming the same.
2.1 Brief facts of the case are that the return of income declaring total income of Rs.2,234,410/- was filed on 28-11-2014 by the assessee. The case of the assessee was selected for scrutiny under CASS. Notice u/s 143(2) of the Act was issued to the assessee on 28-08-2015 which was served upon the assessee on 14-09-2015. Notices u/s 143(2) and 142(1) alongwith questionnaire was also sent to the assessee . The ld. AR of the assesee produced the books of account i.e. computer generated cash book & ledger, bills and voucher and also submitted the reply of the questionnaire with supporting details and these were examined by the AO on test check basis. From the assessment order, it is noted that the assessee derives income from trading of agricultural items and during the year the gross profit from this business activity has been declared at Rs.56,09,655/-. Against this profit, the assessee had claimed a loss of Rs.56,14,805/- on account of NCDEX and MCX Loss. In order to verify the loss declared by the assessee, the contract notes were called for by the AO from the assessee to justify the claim. The AO asked the assessee to explain as to why the loss may not be treated to be speculative in nature. To this effect the assessee submitted the reply mentioning that the loss was of the nature of regular business and also stated that in view of the provisions of Section 43(5)(e), the same cannot be treated as speculative and therefore, the same is allowable against the business income of the assessee. The assesee also submitted that the commodities transacted by him have been made exempt from Commodities Transaction Tax, therefore, nonpayment of CTT would not in any way affect the nature of the business being non-speculative. Further, the assessee had provided the contract notes and it was found that the transactions had been carried out through the broker Anand Rathi Commodities and all the trades had been executed NCDEX. In this case, the AO has revisited Section 43(5)(e) of the Act in the assessment order and observed that for the transaction to be out of purview of the speculative transactions, following conditions must be fulfilled.
It must be an eligible transaction.
The eligible transaction must be carried out in a recognized association 3. Commodity transaction tax (CTT) must be paid on it. It is noted that the loss of Rs.39,88,783/- was not allowed by the AO to be set off against the business of trading of physical commodities by observing as under:- ‘’From the above facts, it is quite clear that the eligible transaction is the one which is carried out in a recognized association and for this purpose, NCDEX was not the recognized association. NCDEX was recognized only on 27.11.2013. As mentioned above, the assessee has carried out all of his transactions in NCDEX. Therefore, very first condition of sec. 43(5)(e) does not get fulfilled for the transactions prior to 27.11.2013. Consequently, the transactions of the assessee prior to 27.11.2013 are not covered by the provisions of section 43(5)(e) and therefore the transactions carried out by the assessee prior to 27.11.2013 fall within the preview of speculative transaction only. The loss incurred by the assessee on the transactions prior to 27.11.2013 is Rs.39,88,783/- which is squarely the speculative loss of the assessee. Therefore considering the facts of the case and the position of law as provided in section 43(5)(e) of the IT Act, the loss to the extent of Rs. 39,88,783/- out of total loss claimed Rs.56,14,805/- which pertain to the period prior to 27.11.2013 is hereby treated as speculative in nature. Therefore the loss of Rs. 39,88,783/- is not allowed to be set off against the business of trading of physical commodities and is hereby disallowed. Therefore the amount of Rs. 39,88.783/- is added back to the total income of the assessee. ‘’ 2.2 In first appeal, the ld. CIT(A) has confirmed the action of the AO by observing as under:- As regards Ground of appeal no 2, I have decided the issue against the appellant in the appeal no 57/16-17 for AY 2013-14 order dated 05/09/2017 A speculative transaction is defined as purchase or sale of any commodity, including stocks & shares, periodically or ultimately settled otherwise than by the actual delivery or transfer. The following clause (e) was inserted in proviso to clause (5) of section 43 by the Finance Act, 2013, w.e.f. 1-4-2014: (e) an eligible transaction in respect of trading in commodity derivatives carried out in a recognised association shall not be deemed to be a speculative transaction.(Explanation)-For the purposes of this clause, the expressions- (i) "commodity derivative" shall have the meaning as assigned to it in Chapter VII of the Finance Act, 2013; (ii) "eligible transaction" means any transaction,- (A) carried out electronically on screen-based systems through a stock broker or sub- broker or such other intermediary registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made or directions issued under those Acts or by banks or mutual funds on a recognised stock exchange; and (B) which is supported by a time stamped contract note issued by such stock broker or sub-broker or such other intermediary to every client indicating in the contract note the unique client identity number allotted under any Act referred to in sub-clause (A) and permanent account number allotted under this Act, (ii) "recognised stock exchange" means a recognised stock exchange as referred to in clause (f) of section 273 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified by the Central Government for this purpose;] THE ITAT MUMBAI BENCH F in Varsha Corporation Ltd. u. Deputy Commissioner of Income-tax (OSD) -9(1) 45 taxmann.com 352 (Mumbai - Trib.) Section 43(5) of the Income-tax Act, 1961 Speculative transaction Assessment year 2009-10 Transactions done by assessee in commodity derivatives related to financial year 2008-09 Provision of clause (e) of proviso to section 43(5) holding such transaction to be non-speculative in nature, was inserted only with effect from 1-4-2014- Whether in relevant year assessee would not be entitled to claim benefit of said clause and, hence, loss from such transactions could not be treated as normal business loss- Held, yes Circulars & Notifications: Notification No. 46/09, dated 22-5-2009, Notification No. 51, dated 4-7-2013. Notification No. 92/2013, dated 29-11-2013. The ITAT held that- ..11. We have given our thoughtful consideration to the submissions advanced at the hands of the learned counsel for the assessee as well as learned DR for the department Admittedly, MCX, through which the assessee has carried out the transactions, is not a recognized stock exchange as under the provisions of Section 43(5)(d) of the Act. As it can be seen from the abovementioned Notification dated 29-11-2013, which has been relied upon by the learned AR, which has also been reproduced in the above part of this order, the MCX, through which the assessee has carried out the transactions, is notified as a recognized association for the purposes of clause (e) of proviso to clause 5 of Section 43 of the Act. Clause (e) of proviso to sub-section (5) of Section 43 has recently been inserted by the Finance Act, 2013 wef 1st April, 2014,which reads as under- (e) an eligible transaction in respect of trading in commodity derivatives carried out in a recognized association, shall not be deemed to be a speculative transaction." ....However, in the present case, as mentioned earlier, provisions of clause (e) of the prosso to Section 43(5) did not exist during the period when the assessee carried out the transactions. In view of above discussion, we hold that assessee is not entitled to claim the benefit of clause (e) of the proviso to Section 43(5) of the Act. In similar circumstances, the Jurisdictional ITAT Jaipur Bench in Shri Prem Prakash Gupta vs. ITO, Ward- 2 (3), Alwar relying on the same ITAT decision in case of Prem Prakash Uma Shankar disallowed the loss by holding it to be a speculative loss. The ITAT also considered the same case laws as are relied upon by the appellant in this appeal as well. …..We have heard the rival contentions and perused the materials available on record. It is undisputed that NCDEX terminal was not a recognized stock exchange as per Rule 6DDB r.w.s. 43(5)(d) of the Income Tax Act, 1961 at the relevant time. Ld. CITIA) while treating the loss as speculative has relied on ITAT Jaipur Bench judgment in dated 20.02.2013 in case of Prem Prakash Uma Shankar. Since the issue has been decided by the coordinate Bench, we find no valid reason to deviate from the same. In the interest of judicial discipline, we respectfully follow the same and uphold Id CIT(A) order. This solitary ground of the assessee is dismissed. NCDEX was notified as an exchange for the purposes of section 43 (5) only from 27.11.2013 onwards and the notification of the CBDT is also dated 29.11.2013. Thus The A.O was right on the facts involved that the assessee could not be given the benefit of the provisions of section 43 (5) (e) in respect of the transactions claimed. The appellant could not establish that these commodity contracts were delivery based, or that he had physical stocks of the traded commodity. In fact the appellant has himself submitted that Further in an alternative view the humble assessee has intended to execute the transaction into Physical Delivery only but due to some quality issues into the material the same was rejected an non availability of the desired Material on time resulted into no execution of the transaction as Physical Delivery.
The A.O has already allowed the transactions post the recognition of the NCDEX Le after 23/11/2013 Thus in the absence of any physical delivery being involved for the earlier period and the opinion available, I am not inclined to accept his explanation that these transactions prior to 23/11/2013 were not speculative in nature. The claim of loss is accordingly treated as speculative to the extent of Rs.39,88,783/- but allowed to bet set off against the speculative profits in future as has been done by the AO,’’ 2.3 During the course of hearing, the ld. AR of the assessee prayed that the ld. CIT(A) has erred in confirming the addition of Rs.39,88,783/- treating the claim of loss of the assessee as speculative loss but allowed to set off against the speculative profits in future as has been done by the AO. To this effect, the ld. AR of the assessee has filed the following written submission ‘’Ground No. 1 and 1.1 1. That on the facts and circumstances of the case, the loer authority grossly erred in disallowing the NCDEX trading loss in the amount of Rs 39.88,783/-out of total loss of Rs 56,14,805/- by treating the same as speculation loss. 1.1 That on the facts and in circumstances of the case, the ld. Lower authorities grossly erred in not considering the submission made by the assessee appellant that the proviso to clause 5 of the section 43 of the Income-tax Act, 1961 is applicable from 1.04.2013, Delay in notifying the NCDEX as exchange cannot nullify the legislative mandate of the enactment. Delay was attributable to the Central Board of Direct Taxes, who failed to issue necessary notification within time. i. That assessee appellant is a Partnership Firm, which is Dealer & Commission of all kind of agriculture products. ii. That assessee appellant during the year under consideration declare the non- speculation loss of Rs 56,14,805/- on account of trading in National commodity and Derivative Exchange. iii. That clause 5 of section 43 of the Income tax act discuss about the speculation transaction which is reproduce as under:
Section 43(5) "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips: iv. That there was amendment in Section 43(5) of the act through finance act 2013 and sub clause (e) was newly inserted which is reproduce as under: 43(5)(e) an eligible transaction in respect of trading in commodity derivatives carried out in recognized stock exchange, which is chargeable to commodities transaction tax shall not be deemed to be a speculative transaction: v. That for the purpose of sub clause (e) the department through notification No. 90/2013 dated 27.11.2013 recognized the National Commodity and Derivatives Exchange Limited. vi. That Id, assessing officer during the assessment proceeding treated the transaction made prior to the notification dated 27.11.2013 i.e. Rs 39,88,783/- out of total transaction of Rs 56,09,655/- as speculation transaction by giving prospective effects to the said notification dated 27.11.2013. vii. That identical controversy came before the Hon'ble Delhi Court in the matter of -CIT v. Nasa Finelease P. Ltd dated 06.09.2013 where proviso (d) to the clause 5 of the section 43 of the Income tax Act was introduce with effect from 1.04.2006 and prior to that Rule 6 DDA and Rule DB were notified on 1.07.2005 and subsequently the two-stock exchange i.e. National Stock Exchange and Bombay Stock Exchange notifies for the purpose of proviso (d) to the clause 5 of the section 43 of the Income tax Act vide notification No. 2/2006 dated 25.01.2006. viii. That issue arise before the Hon'ble Delhi High Court that whether the transaction carried out u's 43(5xd) of the Income tax act is to be assessed from the point of view of notification recognition Stock Exchange or from the applicability of the amended provision u/s 43(5) of the Income tax Act. The Hon'ble Court held that: "The factual position is not in dispute. Notification No.2/2006 dated 25th January, 2006, issued by the Central Board of Direct Taxes does not specify any particular date and simply notifies the National Stock Exchange India Ltd. and Bombay Stock Exchange, Mumbai under proviso (d) to clause (5) to Section 43 of the Act. The said proviso had become applicable with effect from 1st April, 2006. Issue of notification obviously had to take some time as it involved processing and examination of applications etc. This was a matter relating to procedure and the delay in issue of notification or even framing of the Rules was due to administrative constraints. We agree with the tribunal that the delay occasioned, as procedure and formalities have to be complied with, should not disentitle and deprive an assessee, specially, when the transactions were carried through a notified stock exchange. The aforesaid delay is not attributable to the assessee. The notification, therefore, merits and should be given retrospective effect. Notification was procedural and necessary adjunct to the Section enforced with effect from 1st April, 2006. The rule and notification issued in the present case effectuate the statutory and the legislative mandate. There is no good ground or reason why the notification in question should not be given effect from 1st April, 2006. No reason or ground is alleged or argued to contend that National Stock Exchange India Ltd. could not and should not have been notified from 1st April, 2005."(Copy of order is enclosed at Paper Book -I Page 6-7) ix Further we are submitting the comparison chart of the factual and legal dispute in the case of CIT v. Nasa Finelease P. Ltd dated 06.09.2013 and in the case of the assessee appellant:-
Nasa Finelease P. Ltd Ramavtar Krishavtar (Assessee appellant) loss of Rs1.90.29,988 in derivative transactions loss of Rs 56,14,805/- on account of trading in in National Stock Exchange. National commodity and Derivative Exchange, Period of transaction July 2005 to Sept. 2006 Period of transaction year 2013 to 2014 Transaction eligible u/s 43(5)(d) of the Act Transaction eligible u/s 43(5)(e) of the Act (w.e.f. A.Y. 2006-07) w.e.f. A.Y. 2014-15 Notification No. 2/2006 dated 25-01-2006 Notification No. 90/2013 dated 27-11-2013 notifies National Stock Exchange and Bombay notifies National Commodity and derivative Stock Exchange for the purpose of transaction Exchange for the purpose of transaction u/s u/s 43(5)(d) of Act 43(5)(e) of the Act. Hon’ble ITAT – held Notification is retrospective in nature and applicable from 01- 04-2006 Hon’ble Delhi High Court – upheld the effect of Notification as retrospective in nature and applicable from 01-04-2016 x. That nature of the controversy in the case of Nasa Finelease and in the case of the assessee is identical and the effect of the notification dated 27-11-2013 should be given retrospective effect and disallowance made by the AO and confirmed by the ld. CIT(A) may kindly be deleted. ‘’ The ld. AR of the assesee has filed the copy of following Notifications concerning the issue in question 1. CBDT Notification No. 90/2013 dated 27-11-2013 2. Notification No. 2/2006 Income Tax dated 25-01-2006, Further, the ld. AR of the assessee has relied on following decisions 1. DCIT vs Jaroli Vincome Pvt. Ltd m 2015 (12) TMI 1117-ITAT Kolkata 2. M/s. P.D. Sekharia Trading Company Pvt. Ltd. vs DCIT (ITA No. 331/ASR/2019 dawted 19-03-2019) 2.4 On the other hand, the ld. DR relied upon the order of the ld. CIT(A) and also relied upon the following decisions.
1. Premier Industries (India) Pvt. Ltd. vs. CIT, Range-1, Indore Tribunal datred 19-11-2018 2. Commercial Motors Ltd. vs DCIT (2013) 36 taxmann.com 528 (Allahabad) 3. CIT vs Asian Financial Services Ltd. (2016) 75 taxmann.com 68 (SC) 4. Araska Diamond (P) Ltd. vs ACIT (2014) 52 taxmann. Com 238 (Mumbai- Trib) 5. Shri Prem Prakash Gupta vs ITO (ITA No. 599/JP/2013 dated 11-08-2013 2.5 The Bench has heard both the parties and perused the materials available on record and also taken into consideration the case laws cited by both the sides. In this case, it is noted that the AO during the course of assessment proceedings treated the transaction made prior to the notification dated 27-11-2013 at Rs.39,88,783/- out of total transaction of Rs.56,09,655/- as speculation by giving prospective effects to the said notification dated 27-11-2013 which has been confirmed by the ld. CIT(A). It is not imperative to repeat the facts as narrated by the ld.CIT(A) in his appellate order but the Bench noted that the issue in question is directly covered by the decision of ITAT Amritsar in the case of P.D. Sekharia Trading Company Pvt. Ltd. vs DCIT (ITA No. 331/Asr/2018 dated 19-03-2019 whose relevant para is reproduced as under:-
‘’50. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. In the instant case, the undisputed facts are that the assessee has suffered loss of Rs.4,69,47,808/- in trading in agricultural based commodity derivatives during the period 21.05.2013 to 22.08.2013. The assessee claimed the above loss as non-speculative loss and set off the same against other business income in the return of income filed for the assessment year 2014-15.
The AO has not allowed set off of this loss and treated the same as speculative business loss.
On appeal, the CIT(A) confirmed the action of the AO.
The above loss was treated as speculative loss on the ground that NCDEX association in which the said trade was carried out was notified as a recognized association u/s 43(5)(e) of the Act vide notification dated 27.11.2013 and the relevant trade was carried out during the period 21.05.2013 to 22.08.2013; secondly, Commodity Transaction Tax (CTT) was not paid in respect of the above transactions.
We find that clause (e) to Section 43(5) of the Act was Inserted into the statue w.e.f. 01.04.2014 and therefore, the said provision was applicable w.e.f. assessment year 2014-15 and was in force during the year under consideration. Section 43(5) of the Act provides definition of speculative transaction giving rise to speculative income or speculative loss as a transaction of purchase of sale of commodity including share, etc. which is settled otherwise than by actual delivery.
However, certain exceptions have been provided in the first proviso of the said section itself. By virtue of this proviso, the transactions described in the proviso even when settled otherwise than by actual delivery, the same are treated as non-speculative. The Clause (e) of the said proviso as inserted w.e.f. 01.04.2014 reads as under: "Explanation 2. - For the purposes of clause (e), the expression- (i) "commodity derivative" shall have the meaning as assigned to it in Chapter VII of the Finance Act,2013; (ii) "eligible transaction means any transaction,- (A) carried out electronically on screen-based systems through member or any intermediary, registered under the bye-laws, rules and regulations of the recognized association for trading in commodity derivative in accordance with the provisions of the Forward Contracts (Regulation) Act, (74 of 1952) and the rules, regulations or bye-laws made or directions issued under that Act on a recognized association; and (B) which is supported by a time stamped contract note issued by such member or intermediary to every client indicating in the contract note, the unique client identity number allotted under the Act, rules, regulations or bye-laws referred to in sub-clause (A), unique trade number and permanent account number allotted under this Act: (iii) "recognized association" means a recognized association as referred to the clause (j) of section 2 of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) and which fulfils such conditions as may be prescribed and is notified by the Central Government for this purpose:" 56. The contention of the Revenue is that though the provision was inserted w.e.f. assessment year 2014-15 but as the recognized association was notified by the notification dated 27.11.2013, the eligible transaction entered into prior to that date will not quantify as non-speculative transaction. . We find that similar issue arose before the Hon'ble Delhi High Court in the case of CIT Vs NASA Finelease Pvt. Ltd. reported in 358 ITR 305 (Del.) wherein in relation to clause (d) of first proviso to Section 43(5) of the Act which was inserted w.e.f. assessment year 2006-07 and the recognized stock exchange was notified vide notification dated 25.01.2006 and therefore, the transaction which were otherwise eligible during the period 01.04.2005 to the date of notification were to be treated as non- speculative or not was decided as under: "7. The factual position is not in dispute. Notification No.2/2006 dated 25th January, 2006, issued by the Central Board of Direct Taxes does not specify any particular date and simply notifies the National Stock Exchange India Ltd. and Bombay Stock Exchange, Mumbai under proviso (d) to clause (5) to Section 43of the Act. The said proviso had become applicable with effect from 1stApril, 2006.Issue of notification obviously had to take some time as it involved processing and examination of applications etc. This was a matter relating to procedure and the delay in issue of notification or even framing of the Rules was due to administrative constraints. We agree with the tribunal that the delay occasioned, as procedure and formalities have to be complied with, should not disentitle and deprive an assessee, specially, when the transactions were carried through a notified stock exchange. The aforesaid delay is not attributable to the assessee. The notification, therefore, merits acceptance and should be given retrospective effect. Notification was procedural and necessary adjunct to the Section enforced with effect from 1stApril, 2006. The rule and notification issued in the present case effectuate the statutory and the legislative mandate. There is no good ground or reason why the notification in question should not be given effect from 1stApril, 2006. No reason or ground is alleged or argued to contend that National Stock Exchange India Ltd. could not and should not have been notified from 1stApril, 2006."
A perusal of notification dated 27.11.2013 notifying NCDEX as recognized association, the language employed therein was similar to the language employed in notification dated 25.01.2006 whereby National Stock Exchange of India Ltd., Bombay and Bombay Stock Exchange Ltd., Bombay where notified as recognized stock exchange for the purpose of clause (d). Therefore, respectfully following the above decision of the Hon'ble Delhi High Court, we hold that the notification will take effect during the entire previous year 2013-14 relating to assessment year 2014-15.
The next issue raised by the Id. DR was that no Commodity Transaction Tax (CTT) paid in respect of trading transaction of the assessee under consideration and therefore, the same does not quantify for being treated as non- speculative.
We find that it is not in dispute that the trading transactions of the assessee were in agricultural commodity derivatives. As per the provisions of law, no CTT is legally chargeable in respect of agricultural commodity derivatives. The Id. AR of the assessee drawn our attention to the Second proviso to Section 43(5) of the Act inserted by the Finance Act, 2018 which reads as under:
Provided further that for the purposes of clause (e) of the first proviso, in respect of trading in agricultural commodity derivatives, the requirement of chargeability of commodity transaction tax under Chapter VII of the Finance Act, 2013 (17 of 2013) shall not apply.
The Id. DR pointed out that the above Second proviso was inserted w.e.f. 01.04.2019 and therefore, was not applicable in the assessment year 2014-15.
We find that vide inserting clause (e) in the First proviso to Section 43(5) of the Act, the Hon'ble Finance Minister stated In the Parliament as under: "149. There is no distinction between derivative trading in the securities market and derivative trading in the commodities market, only the underlying asset is different. It is time to introduce Commodities Transaction Tax (CTT) in a limited way. Hence, I propose to levy CTT on non-agricultural commodities future contracts at the same rate as on equity futures, that is commodities futures contracts at the same rates as on equity futures, that is at 0.001 per cent of the price of the trade. Trading in commodity derivatives will not be considered as 'speculative transaction' and CTT shall be allowed as deduction if the income from such transaction forms part of business income. As I said, agricultural commodities will be exempt."
Thus, from the speech of the Hon'ble Finance Minister at the time of insertion of clause (e), it is observed that all eligible transactions in all commodity derivatives were proposed to be treated as non-speculative transaction. The Hon'ble Finance Minister has not brought any distinction between agricultural commodity derivatives and non- agricultural commodity derivatives for this purpose. Thus, it shows that it was not intended to treat only non-agricultural commodity derivatives transactions as non- speculative transaction.
However, a condition was imposed in the section that all being treated as non- speculative transaction amongst several other transactions like time stamped contract note, distinctive trade number, transaction in a recognized association etc. was chargeable to CTT. However, CTT was not chargeable in respect of agricultural commodity derivatives. Thus, it transpires that an uninitiated consequence followed. That an otherwise eligible transaction in agricultural commodity derivative which satisfies all other substantial provisions of clause (5) of First proviso to Section 43(5) of the Act was still to be treated as speculative transaction because it was not subjected to CTT and as per the provision of law was not possible because CTT was not leviable In respect of agricultural commodity derivatives. To remove this unintended consequence, Second proviso to Section 43(5) of the Act was inserted which has already been quoted above. As per the Second proviso trading in agricultural commodity derivative that satisfies all other conditions specified in clause (5) will not be treated as speculative merely because the said transaction was not subjected to CTT.
In the above back ground, in our considered view, the Second proviso which has been inserted by the Finance Act 2018 is curative and therefore is to be treated as came into force from the date from which clause (5) itself was inserted In the statute i.e. with effect from 01.04.2014. Our above view finds support from the decision of the Hon'ble Supreme Court in the case of Allied Motors Pvt. Ltd. Vs CIT 224 ITR 677 (SC) wherein it was held that a proviso which is designed to eliminate unintended consequence which may cause undue hardship to the assessee and unjust in a specific situation is to be read as retrospective with effect from which the main section was inserted.
To the same effect is the decision of the Hon'ble Delhi High Court in the case of CIT Vs Ansal Land Mark Township Pvt. Ltd. 377 ITR 635 (Del.) wherein decision of the Agra Bench of the Tribunal in the case of Rajeev Kumar Agarwal Vs Addl.CIT (2014) 34 ITR (T) 349 (Agr.) was confirmed wherein it was held that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically by the statue. It was held that Second proviso to Section 40(a)(la) of the Act must be given retrospective effect of the point of time when the related legal provision was introduced. Thus, in view of the above discussion as in the instant case, it is not in dispute that the assessee's transactions in agricultural commodity derivative were otherwise eligible transaction within the meaning of Section 43(5)(e) of the Act, we set aside the orders of the lower authorities on this issue and direct the AO to treat the loss of Rs. 4,69,47,808/- in said transaction as non- speculative business loss and accordingly allow set off of the same from other business income as per law. Thus, this ground of appeal of the assessee is allowed.’’ The Bench has also been apprised that Revenue has not challenged the order of ITAT Amritsar Bench (supra) at higher forum and even no material has been placed on record by the Revenue to counter the said fact. Hence, in view of the above decision of ITAT Amritsar Bench dated 19-03-2019, the Bench does not concur with the findings of the ld. CIT(A) and thus the ground of appeal No. 1 of the assessee is allowed.