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“Section 43(5)”

Section References (mined)Section 43Section 43(5)238 judgments

The decision most relied on for Section 43(5) is CIT v. Woodward Governor India Pvt. Ltd. (312 ITR 254), cited in 968 judgments on BharatTax.

Leading authorities on Section 43(5)

CIT v. Woodward Governor India Pvt. Ltd.
312 ITR 254 · 2009 · Supreme Court
968
citing judgments

Foreign exchange fluctuations, whether gains or losses, are inextricably linked to the underlying business transaction and must be accounted for under the mercantile system. The Supreme Court also affirmed the standard accounting principle of valuing stock at cost or net realisable value, whichever is lower.

Brooke Bond India Ltd. v. CIT
225 ITR 798 · 1997 · Supreme Court
228
citing judgments

Expenditure incurred for increasing a company's share capital or expanding its capital base, such as expenses related to the issue of shares, constitutes capital expenditure. Such expenses are not deductible as revenue expenditure under Section 37(1) of the Income-tax Act, 1961, even if they incidentally benefit the business.

DCIT v. Reliance Industries Ltd.
88 ITD 273 · 2004 · ITAT
169
citing judgments

Interest, sales tax, and purchase tax subsidies received by an assessee are generally considered capital receipts, not revenue income, for income tax purposes.

Punjab State Industrial Development Corporation Ltd. v. CIT
225 ITR 792 · 1997 · Supreme Court
158
citing judgments

Expenditure incurred for increasing a company's share capital, such as expenses related to issuing shares or an initial public offering (IPO), is capital expenditure. Such expenses are not allowable as a revenue deduction under Section 37, even if they incidentally benefit the business, because they result in an increase in capital.

CIT v. Chaphalkar Brothers
400 ITR 279 · 2018 · Supreme Court
136
citing judgments

A subsidy is classified as a capital receipt if its object is to enable the assessee to set up or expand a new or existing unit. Conversely, it is a revenue receipt if its purpose is to help the assessee run the business more profitably.

CIT v. Rittal India (P) Limited
380 ITR 423 · 2016 · High Court
121
citing judgments

Additional depreciation is allowable under section 32(1)(iia) for new machinery or plant even when put to use for less than 180 days, with the unabsorbed balance available for claim in the subsequent year.

CIT v. Badridas Gauridu (P) Ltd.
261 ITR 256 · 2003 · High Court
114
citing judgments

Losses incurred from foreign exchange forward contracts or derivatives, entered into to hedge currency fluctuations in the course of regular business like exports, are treated as business losses and not as speculative transactions under Section 43(5). Such contracts, when incidental to business and cover exchange rate risks, constitute a business activity.

CIT v. Oswal Agro Mills Ltd.
341 ITR 467 · 2012 · High Court
108
citing judgments

The Legislature abolished terminal depreciation under section 32(1)(iii) and the taxing of balancing charge under section 41(2), replacing these provisions with the requirement to reduce sale proceeds of depreciable assets from the block of assets.

Judgments citing Section 43(5)

DCIT, Gurgaon vs. Orient Craft Ltd., New Delhi

ITA 3202/DEL/2017[2011-12]Status: DisposedITAT Delhi20 Mar 2026AY 2011-12

Bench: Shri Satbeer Singh Godara & Shri Naveen Chandra

For Appellant: Shri Salil Aggarwal, Sr. AdvFor Respondent: Ms. Monika Singh, CIT(DR)
Section 10BSection 14A

where the loss on account of deficit on settlement of forward contracts(Net) was rightly taken as speculation loss under the provisions of section 43(5) of the Income tax Act, 1961 without appreciating the facts of the case.” ITA No.- 3774/Del/2015(A.Y. 2010-11) Revenue’s appeal ... where the loss on account of deficit on settlement of forward contracts(Net) was rightly taken as speculation loss under the provisions of section 43(5) of the Income tax Act, 1961. Page 4 of 23 ITA-3625-3526/Del/2015 ITA-3773-3774/Del/2015 ITA3202-3203/Del/2017 M/s Orient

DCIT, New Delhi vs. M/S Orient Craft Ltd., New Delhi

In the result the appeal of the assessee in ITA No:- 3625/Del/2015 and

ITA 3774/DEL/2015[2010-11]Status: DisposedITAT Delhi20 Mar 2026AY 2010-11

Bench: Shri Satbeer Singh Godara, And

For Appellant: Shri Salil Aggarwal, Sr. AdvFor Respondent: Ms. Monika Singh, CIT(DR)
Section 10BSection 14A

where the loss on account of deficit on settlement of forward contracts(Net) was rightly taken as speculation loss under the provisions of section 43(5) of the Income tax Act, 1961 without appreciating the facts of the case.” ITA No.- 3774/Del/2015(A.Y. 2010-11) Revenue’s appeal ... where the loss on account of deficit on settlement of forward contracts(Net) was rightly taken as speculation loss under the provisions of section 43(5) of the Income tax Act, 1961. Page 4 of 23 ITA-3625-3526/Del/2015 ITA-3773-3774/Del/2015 1TA3202-3203/Del/2017 M/s Orient Craft

DCIT, New Delhi vs. M/S. Orient Craft Ltd., New Delhi

ITA 3773/DEL/2015[2009-10]Status: DisposedITAT Delhi20 Mar 2026AY 2009-10

Bench: Shri Satbeer Singh Godara & Shri Naveen Chandra

For Appellant: Shri Salil Aggarwal, Sr. AdvFor Respondent: Ms. Monika Singh, CIT(DR)
Section 10BSection 14A

where the loss on account of deficit on settlement of forward contracts(Net) was rightly taken as speculation loss under the provisions of section 43(5) of the Income tax Act, 1961 without appreciating the facts of the case.” ITA No.- 3774/Del/2015(A.Y. 2010-11) Revenue’s appeal ... where the loss on account of deficit on settlement of forward contracts(Net) was rightly taken as speculation loss under the provisions of section 43(5) of the Income tax Act, 1961. Page 4 of 23 ITA-3625-3526/Del/2015 ITA-3773-3774/Del/2015 ITA3202-3203/Del/2017 M/s Orient

M/S. Orient Craft Ltd., New Delhi vs. DCIT, New Delhi

ITA 3626/DEL/2015[2010-11]Status: DisposedITAT Delhi20 Mar 2026AY 2010-11

Bench: Shri Satbeer Singh Godara & Shri Naveen Chandra

For Appellant: Shri Salil Aggarwal, Sr. AdvFor Respondent: Ms. Monika Singh, CIT(DR)
Section 10BSection 14A

where the loss on account of deficit on settlement of forward contracts(Net) was rightly taken as speculation loss under the provisions of section 43(5) of the Income tax Act, 1961 without appreciating the facts of the case.” ITA No.- 3774/Del/2015(A.Y. 2010-11) Revenue’s appeal ... where the loss on account of deficit on settlement of forward contracts(Net) was rightly taken as speculation loss under the provisions of section 43(5) of the Income tax Act, 1961. Page 4 of 23 ITA-3625-3526/Del/2015 ITA-3773-3774/Del/2015 ITA3202-3203/Del/2017 M/s Orient

M/S. Orient Craft Ltd., New Delhi vs. DCIT, New Delhi

ITA 3625/DEL/2015[2009-10]Status: DisposedITAT Delhi20 Mar 2026AY 2009-10

Bench: Shri Satbeer Singh Godara & Shri Naveen Chandra

For Appellant: Shri Salil Aggarwal, Sr. AdvFor Respondent: Ms. Monika Singh, CIT(DR)
Section 10BSection 14A

where the loss on account of deficit on settlement of forward contracts(Net) was rightly taken as speculation loss under the provisions of section 43(5) of the Income tax Act, 1961 without appreciating the facts of the case.” ITA No.- 3774/Del/2015(A.Y. 2010-11) Revenue’s appeal ... where the loss on account of deficit on settlement of forward contracts(Net) was rightly taken as speculation loss under the provisions of section 43(5) of the Income tax Act, 1961. Page 4 of 23 ITA-3625-3526/Del/2015 ITA-3773-3774/Del/2015 ITA3202-3203/Del/2017 M/s Orient

Income Tax Officer, New Delhi vs. R L Steel and Energy Limited, New Delhi

In the result, the appeal of the revenue is dismissed

ITA 3109/DEL/2025[2010-11]Status: DisposedITAT Delhi11 Mar 2026AY 2010-11

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganeshincome Tax Officer, Vs. Rl Steel & Energy Ltd, New Delhi 70, Daryaganj, New Delhi (Appellant) (Respondent) Pan: Aaacr5809B Assessee By : Shri Akhilesh Bhargava, Ca Revenue By: Shri Om Prakash, Sr. Dr Date Of Hearing 07/01/2026 Date Of Pronouncement 11/03/2026

For Appellant: Shri Akhilesh Bhargava, CAFor Respondent: Shri Om Prakash, Sr. DR
Section 143(3)Section 14ASection 43(5)

transactions are to be treated as speculative transactions, it is well covered under the provisions of clause (a) of proviso to section 43(5) of the Act which allows speculative transactions to be treated as normal business loss. The learned AO not satisfied with the reply concluded that the said ... loss is in the nature of forward transaction loss arising on such a transaction and the same is covered by section 43(5) of the Act to be speculative in nature and accordingly proceeded to disallow the said loss of Rs 2,21,97,360 in the assessment

Pankaj Agarwal, Kanpur vs. The AO Special Range, Kanpur

In the result, the appeal of the assessee is allowed

ITA 122/LKW/2024[2017-18]Status: DisposedITAT Lucknow27 Feb 2026AY 2017-18

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudharya.Y. 2017-18 Pankaj Agarwal, 7/151, Ratan Vs. The Assessing Officer, Majestic, Opp. Sony World, Special Range, Kanpur- Swaroop Nagar, Kanpur-208002 208001 Pan: Abnpa4816E (Appellant) (Respondent) Assessee By: Sh. Rakesh Garg, Adv Revenue By: Sh. R.R.N. Shukla, Addl Cit Dr Date Of Hearing: 23.12.2025 Date Of Pronouncement: 27.02.2026 O R D E R Per Nikhil Choudhary, A.M.: This Is An Appeal Filed By The Assessee Against The Order Passed By The Ld. Cit(A), Nfac Dated 9.01.2024 Wherein The Ld. Cit(A) Has Dismissed The Appeal Of The Assessee Against The Orders Of The Ld. Ao, Special Range, Kanpur, Passed Under Section 143(3) On 26.09.2019. 2. It Is Seen From The Record That The Appeal Is Delayed By 2 Days. However, Since The Date Of Filing Is Preceded By Saturday & Sunday, Wherein The Offices Of The Itat Were Closed, The Delay Is Condoned & The Appeal Is Admitted For Hearing. The Grounds Of Appeal Are As Under: - “1. Because The Cit(A) Has Erred On Facts & In Law In Treating The Loss Of Rs.42,17,895/- Being Loss On Account Of Trading In Derivatives As A Capital Loss As Against Business Loss Claimed By The Assessee, Which Finding Of The Ao Being Contrary To Facts, Bad In Law, The Addition Made Be Deleted.

For Appellant: Sh. Rakesh Garg, AdvFor Respondent: Sh. R.R.N. Shukla, Addl CIT DR
Section 143(3)Section 43(5)Section 44ASection 72Section 74

been done the order of CIT(A) being bad in law be quashed. 3. Because on a proper interpretation of the provisions of section 43(5) trading in derivatives being non-speculative, would not be a speculative loss, the same being loss incurred in business ought ... derivatives were considered as speculative transactions for the purposes of determination of tax liability under the Income Tax Act. Finance Act 2005 amended section 43(5) so as to exclude transactions in derivatives on “recognized stock exchanges” from the purview of speculative income or loss. Thus, losses on derivative transactions

ACIT, CC 6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 4321/MUM/2025[2016-17]Status: DisposedITAT Mumbai20 Feb 2026AY 2016-17

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

ACIT, CC 6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 4320/MUM/2025[2020-21]Status: DisposedITAT Mumbai20 Feb 2026AY 2020-21

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

ACIT, CC 6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 4319/MUM/2025[2019-20]Status: DisposedITAT Mumbai20 Feb 2026AY 2019-20

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

ACIT, CC-6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 4318/MUM/2025[2022-23]Status: DisposedITAT Mumbai20 Feb 2026AY 2022-23

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

ACIT, CC 6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 4090/MUM/2025[2016-17]Status: DisposedITAT Mumbai20 Feb 2026AY 2016-17

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari andFor Respondent: Shri R. A. Dhyani, CIT DR and
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

Overseas Infrastructure Alliance(India) Private Limited, Mumbai vs. Assistant Commissioner of Income Tax Central Circle 6(2), Mumbai

In the result, appeal by the assessee is allowed

ITA 4064/MUM/2025[2022-23]Status: DisposedITAT Mumbai20 Feb 2026AY 2022-23

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari andFor Respondent: Shri R. A. Dhyani, CIT DR and
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

Overseas Infrastructure Alliance(India) Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, Central Circle -6, Mumbai

In the result, appeal by the assessee is allowed

ITA 4045/MUM/2025[2020-21]Status: DisposedITAT Mumbai20 Feb 2026AY 2020-21

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

Overseas Infrastructure Alliance (India) Private Limtied, Mumbai vs. Assistant Commissioner of Income Tax Central Circle 6(2), Mumbai

In the result, appeal by the assessee is allowed

ITA 4044/MUM/2025[2021-22]Status: DisposedITAT Mumbai20 Feb 2026AY 2021-22

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

Overseas Infrastructure Alliance (India) Private Limtied, Mumbai vs. Assistant Commissioner of Income Tax Central Circle 6(2), Mumbai

In the result, appeal by the assessee is allowed

ITA 4043/MUM/2025[2019-20]Status: DisposedITAT Mumbai20 Feb 2026AY 2019-20

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

ACIT CC 6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 3998/MUM/2025[2017-18]Status: DisposedITAT Mumbai20 Feb 2026AY 2017-18

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

ACIT, CC-6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 3995/MUM/2025[2011-12]Status: DisposedITAT Mumbai20 Feb 2026AY 2011-12

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

provisions of explanation to section 73 would therefore, not apply to a derivatives trading business. Transactions relating to derivative trading are governed by section 43(5) of the Act. 3.8. From the order of the ld. CIT(A), we note his observation and finding on the above stated lines, holding ... options’. In addition to what is discussed above, assessee further submitted that in the Finance Bill, 2005, while introducing clause (b) in section 43(5), it also simultaneously amended sub-section (4) to section 73 so as to reduce the period of carry forward of speculation loss from 8 assessment

Ashvin Dineshbhai Jadav, Rajkot vs. ITO, Ward-1(1)(1), Rajkot

In the result, the appeal of the assessee is allowed

ITA 428/RJT/2025[2015-16]Status: DisposedITAT Rajkot29 Jan 2026AY 2015-16

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

For Appellant: Shri Mehul Ranpura, ARFor Respondent: Shri Abhimanyu Singh Yadav, Sr. DR
Section 133(6)Section 143(2)Section 143(3)Section 250

officer. Segment wise loss incurred is as under: Further, all the transactions were carried out through Angel Broking, a registered broker. As per section 43(5) of the Act, the loss incurred on trading of securities/commodities does not fall under the definition of speculative business and hence, the loss

M/S. Narain Properties Limited, Kanpur vs. ACIT-VI, Kanpur

In the result, the appeal of the assessee

ITA 354/LKW/2010[1997-98]Status: DisposedITAT Lucknow05 Jan 2026AY 1997-98

Bench: Shri Kul Bharat & Shri Anadee Nath Misshra

Section 143(3)Section 43(5)Section 45

considered a speculation loss and is not to be set off against other income being interest and commission in view of provisions of section 43(5) and 73 of I.T. Act. Accordingly speculation loss is disallowed. After discussion the income is computed as under:- Interest income as shown ... High Court were on the issue of applicability of Section 73 of the Act whereas the present appeal is about the applicability of Section 43(5) of I.T. Act. Therefore, he submitted, the orders of Hon’ble High Court had no reliance, or application for the present case, as issue