“speculation loss”

Losses & Set-offSection 73Section 73200 judgments

The decision most relied on for speculation loss is CIT v. Badridas Gauridu (P) Ltd. (261 ITR 256), cited in 114 judgments on BharatTax.

Leading authorities on speculation loss

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. Soorajmull Nagarmull

129 ITR 169 · 1981 · High Court

citing judgments

Losses from foreign exchange forward contracts, when incidental to an assessee's regular business and undertaken to safeguard business interests, are treated as business losses and not speculative losses under section 43(5).

CIT v. DLF Commercial Developers Ltd.

35 Taxmann.com 280 · 2013 · High Court

citing judgments

Loss incurred by certain types of companies in trading derivatives is considered speculative loss under the Explanation to Section 73, as the value of stock derivatives depends on shares. Such speculative losses are ineligible for set-off or carry forward against business income.

CIT v. Concord Commercial Pvt. Ltd.

95 ITD 117 · 2005 · ITAT

citing judgments

The aggregate of business profits and losses from derivative transactions must be worked out before applying the Explanation to Section 73 of the Income-tax Act, 1961. This means that trading of shares and derivative transactions are not considered speculative transactions under Section 43(5) for the purposes of Sections 28 to 41.

CIT v. Auric Investment & Securities Ltd.

310 ITR 121 · 2009 · High Court

citing judgments

Penalty under Section 271(1)(c) is not automatically warranted merely because the Assessing Officer reclassifies a business loss as a speculative loss, especially if the assessee did not conceal income or furnish inaccurate particulars. The AO's change in treatment alone does not infer concealment.

CIT v. Darshan Securities (P) Ltd.

341 ITR 556 · 2012 · High Court

citing judgments

A company involved in the purchase and sale of shares is deemed to be carrying on a speculative business to the extent of such transactions, unless it falls under an exception to Section 73 of the Income Tax Act.

Quality Engineering & Software Technologies (P.) Ltd. v. DCIT

52 Taxmann.com 515 · 2014 · ITAT

citing judgments

A forward contract entered into to protect against foreign currency fluctuations on consideration receivable for exports is not a speculative transaction, and provisions for losses on such derivative contracts are allowable expenditures.

CIT v. D. Chetan & Co.

390 ITR 36 · 2017 · High Court

citing judgments

Losses on foreign exchange forward contracts are not speculative if they are entered into to cover variations in foreign exchange rates impacting import/export business. Such losses are considered business losses and not notional.

Judgments citing speculation loss

Smt Rashmi Ramesh Damani, Mumbai vs. DCIT, Circle 17(1), Mumbai

ITA 1129/MUM/2025[2014-15]Status: DisposedITAT Mumbai02 Jan 2026AY 2014-15

Bench: SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER SHRI PRABHASH SHANKAR (Accountant Member)

For Appellant: Shri M. P. LohiaFor Respondent: Shri Vikas Chandra

Section 143(3)Section 271(1)(c)

arbitrage) as speculative transaction and further erred in upholding and confirming the stand of the Ld. ACIT to treat normal business loss as speculation loss. 2. The Ld. CIT(A) erred in upholding and confirming the stand of the Ld. ACIT to hold bad debts as speculation loss and further ... characterized as speculative in nature. Flowing from the discussion above, the losses amounting to Rs 2,62,71,507/- are being treated as speculative losses and in accordance with provision of section 73, such losses can only be set off against profits and gains of another speculation business. The details

Dalmia Cement (Bharat) Ltd., New Delhi vs. ACIT, Central Circle- 26, New Delhi

ITA 5417/DEL/2017[2014-15]Status: DisposedITAT Delhi31 Dec 2025AY 2014-15

Bench: Ms. Madhumita Roy & Shri Amitabh Shukla, Accountnat Member [Assessment Year: 2013-14] The Assistant Commissioner Of M/S Dalmia Cement Bharat Ltd. Income Tax, Circle-1, Dalmiapuram, Williams Road, Vs Tamilnadu, 621651 Cantonment, Trichy, Tamil Nadu-620001 Pan-Aadca9414C Assessee Revenue Cross Objection No.63/Chny/2018 (Arising Out Of Ita No.3157/Chny2017) [Assessment Year: 2013-14] M/S Dalmia Cement Bharat Ltd. The Assistant Commissioner Of Dalmiapuram, Income Tax, Circle-1, Tamilnadu-621651 Vs Williams Road, Cantonment, Trichy, Tamil Nadu-620001 Pan- Aadca9414C Assessee Revenue [Assessment Year: 2014-15] The Assistant Commissioner Of M/S Dalmia Cement Bharat Ltd. Income Tax, Circle-1, Dalmiapuram, Williams Road, Vs Tamilnadu, 621651 Cantonment, Trichy, Tamil Nadu-620001 Pan-Aadca9414C Assessee Revenue

Section 14ASection 32(1)(iia)

5417/Del/2017 along with other cases Accumulated Loss, the loss under the Profits and Gains of Business or Profession(Not being a loss sustained in speculation Loss is only mentioned. THE LOSS SUCH AS LOSS ON HOUSE PROPERTY/LOSS ON CAPITAL IS NOT INCLUDED. 5.2) Further in the Sec.74 dealing with capital

DCIT 4 (3)(1), Mumbai vs. J M Financial Services Ltd., Mumbai

In the result, Revenue‟s appeal is partly allowed

ITA 6729/MUM/2019[2014-15]Status: DisposedITAT Mumbai24 Dec 2025AY 2014-15

Bench: Shri Narender Kumar Choudhry(Jm)& Shri Prabhash Shankar (Am) The Dcit-4(3)(1) J.M. Financial Services Ltd. 7Th Floor, Cnergy, Appasaheb Room No. 649 Aayakar Bhavan Vs. Maratahe Marg M.K. Road Prabhadevi, Mumbai Mumbai-400 020. 400 025. Pan : Aaacj5977A Appellant Respondent Assessee By : Shrik. Shivram & Shri Sanjay Parikh Revenue By : Shri Vivek Perampurna Date Of Hearing : 29/10/2025 Date Of : 24/12/2025 Pronouncement O R D E R Per Narender Kumar Choudhry (Jm) :-

For Appellant: ShriK. Shivram & Shri SanjayFor Respondent: Shri Vivek Perampurna

Section 250Section 73

future and options income has to be treated as business income and loss derived from delivery based shares trading has to be treated as speculative loss and accordingly set off is not allowed. For brevity and ready reference, conclusion drawn by Third Member is reproduced herein below: - 14. I have ... Financial Services Ltd. as there was loss in the cash schemes of Rs. 134,66,95,811/-, he considered the same as speculative loss as per Explanation to Section 73 of the Act. The Assessing Officer finally held that while the F&O income has to be treated as business

Kirti Milind Ranka, Pune vs. Income Tax Officer, Pune

In the result, appeal of the Assessee is partly allowed as

ITA 2176/PUN/2025[2016-17]Status: DisposedITAT Pune26 Nov 2025AY 2016-17

Bench: Shri Manish Borad & Shri Vinay Bhamore

For Appellant: Shri Pawan Jain, CAFor Respondent: Shri Milind Debaje, JCIT (virtual)

Section 143(3)Section 250Section 271(1)(c)Section 274

return of income for A.Y. 2016-17 on 29/07/2016 declaring total income of Rs. 5,15,710/-. In the original return, the assessee reported speculation loss at Rs.81,21,392/- and short term capital loss at Rs. 33,25,597/-. Subsequently, upon advice from the CPC assessee got the accounts ... exceeded Rs. 1.00 crore. The revised return was filed by the Tax Consultant, who consolidated both types of losses and shown them as speculation loss at Rs.1,14,61,428/-. In the scrutiny proceedings carried out u/s.143(3) of the Act after duly serving valid notices, L\d.AO accepted

Vijaya Prakash Nagori, Mumbai vs. ITO Ward 32(2)(1), Mumbai

ITA 3392/MUM/2025[2014-15]Status: DisposedITAT Mumbai26 Nov 2025AY 2014-15

Bench: Hon’Ble Shri Sandeep Gosain& Shri Om Prakash Kantvijaya Prakash Nagori Vs. Ito, Ward, 32(2)(1) 409/C, Abhar Jp Road, Kautilya Bhawan, C-41- Seven Bungalows, Andhere 43, Avenue, 3, Near (W), Mumbai – 400 061. Videsh Bhavan, G Block Bkc Pan/Gir No. Aekpr2943H (Applicant) (Respondent)

Section 10(38)Section 147Section 263oSection 68

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH MUMBAI BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER& SHRI OM PRAKASH

Assistant Commissioner of Income Tax, Mumbai vs. Nevales Networks Private Limited, Mumbai

In the result, the appeal of the Revenue is dismissed

ITA 4827/MUM/2025[2013-14]Status: DisposedITAT Mumbai17 Nov 2025AY 2013-14

Bench: Shri Vikram Singh Yadav & Shri Sandeep Singh Karhailassessment Year : 2013-14 Dcit, Circle-14(1)(1), M/S. Nevales Networks Pvt. Ltd., Room No. 432, 4Th Floor, The Capital, Aayakar Bhavan, Vs. Level 7, Plot-C70, M.K.Road, G Block, Mumbai-400020. Bandra Kurla Complex, Bandra (East), Mumbai-400051. Pan : Aadcn1748A (Appellant) (Respondent) Assessee By : Shri Piyush Chhajed Revenue By : Shri Leyaqat Ali Aafaqui

For Appellant: Shri Piyush ChhajedFor Respondent: Shri Leyaqat Ali Aafaqui

Section 143(3)Section 271(1)(c)

income, the assessee has either concealed his income or has furnished any inaccurate particulars of income. The mere treatment of the business loss as speculation loss by the Assessing Officer does not automatically warrant inference of concealment of income. The assessee did not conceal any particulars of income

ACIT 4(2)(1), Mumbai vs. Glorishine Impex Private Limited, Mumbai

In the result, the appeal filed by the Revenue is dismissed

ITA 2209/MUM/2025[2017-18]Status: DisposedITAT Mumbai14 Nov 2025AY 2017-18

Section 143(1)(a)Section 143(3)Section 270ASection 43(5)Section 72

nature of speculative transactions within the meaning of section 43(5). He therefore re characterised the said loss of Rs.79,40,12,784 as speculation loss. On such re classification, he computed the business income of the assessee at Rs.19,32,699, allowed set off of brought forward business loss ... under section 72 against the said income, and allowed the impugned amount to be carried forward as speculation loss. The total income was thus ultimately assessed at Nil. The assessment order itself records that the loss has only been placed under a different head without any disallowance of the quantum

Pcl Foods Pvt. Ltd., Gurgaon vs. Addi CIT, National E- Assesment Centre, New Delhi

In the result, this appeal of the assessee is partly allowed

ITA 442/DEL/2021[2016-17]Status: DisposedITAT Delhi14 Nov 2025AY 2016-17

Bench: Ms. Madhumita Roy & Shri Brajesh Kumar Singh[Assessment Year: 2016-17] Pcl Foods Private Limited, Additional / Joint/ Unit No.-219, Plot No. 2, Deputy/Assistant Vardhman Crown Mall, Lsc, Vs Commissioner Of Income Sector 19, Dwarka, New Tax/ Income Tax Officer, Delhi-110075. National E-Assessment Centre, Delhi. Pan- Aahcp3493L Assessee Revenue

Section 143(3)Section 92C

assessee in the hedging of currency derivative cannot be considered as 'speculation business' and the loss incurred out of such activity is not a 'speculative loss' and therefore cannot be allowed to be carried forward as per the provision of section 73 of the Act. Ground of objection is therefore ... derivatives SCRA Act & therefore not hit by proviso (d) of Section 43(5). d. Holding that loss incurred in respect of currency derivatives is speculation loss governed by section 73 of the Income tax act e Without appreciating the fact that currency derivate are being taken to hedge the foreign

J vs. Exports, Maduraivs.DCIT, Ncc-2, Madurai

In the result, the appeal of the assessee is allowed

ITA 2059/CHNY/2025[2013-14]Status: DisposedITAT Chennai16 Oct 2025AY 2013-14

Bench: Shri M. Balaganesh & Shri S.S. Viswanethra Raviआयकरअपीलसं./Ita No.:2059/Chny/2025 यनिाारणवर्ा / Assessment Year:2013-14 Jvs Export, Deputy Commissioner Of No.32, Sarojini Street, Vs. Income Tax, Chinna Chokkikulam, Non-Corporate Circle-2 Madurai, Madurai. Tamil Nadu-625 002. [Pan:Aabfj2836N] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थीकीओरसे/Appellant By : Mr.N.Arjun Raj, Advocate प्रत्यर्थीकीओरसे/Revenue By : Ms.R.Anitha, Addl.Cit सुनवाईकीतारीख/Date Of Hearing : 15.10.2025 घोर्णाकीतारीख/Date Of Pronouncement: 16.10.2025 आदेश /O R D E R Per M. Balaganesh, Am : This Appeal By The Assessee Is Filed Against The Order Of The Learned Commissioner Of Income Tax (Appeal), Nfac, Delhi, (In Short Ld.Cit(A) For The Assessment Year 2013-14, Vide Order Dated 21.05.2025. 2. The Preliminary Issue Raised By The Assessee Is Challenging The Validity Of Assumption Of Jurisdiction For Reopening The Assessment In The Instant Case. 3. We Have Heard The Rival Submissions & Perused The Materials Available On Record. The Assessee Is A Partnership Firm & Had Filed Its

For Appellant: Mr.N.Arjun Raj, AdvocateFor Respondent: Ms.R.Anitha, Addl.CIT

Section 143(3)Section 147Section 43(5)Section 73(1)

forward contract’ in the sum of Rs 81,93,973/- which in the opinion of the Learned AO was to be construed as speculative loss and not allowable as deduction. The reasons recorded by the Learned AO for reopening the assessment are as under:- “In the profit and loss account ... cancellation of forward contract”. However, as per section 43(5) of the I.T Act, 1961, the loss on cancellation of forward contract is a speculation loss and as per section 73(1) of the I.T Act, 1961 such loss cannot be set off against profits and gains if any, except

Ridhi Vincom Pvt. Ltd., Kolkata vs. I.T.O., Ward - 4(1), Kolkata

In the result, the appeal of the assessee is allowed

ITA 947/KOL/2025[2013-2014]Status: DisposedITAT Kolkata15 Oct 2025AY 2013-2014

Bench: Shri Rajesh Kumar, Am & Shripradip Kumar Choubey, Jm Ito, Ward 4(1) Ridhi Vincom Pvt. Ltd. Aaykar Bhawan Poorva, C/O M/S Salarpuriajajodia& Co. P-7, Chowringhee Square, 7, C.R. Avenue, 3 Rd Floor, Vs. 8Th Floor, Kolkata-700069, Kolkata-700072, West Bengal West Bengal (Appellant) (Respondent) Pan No. Aaecr9858C Assessee By : Shri S. Jhajharia, Ar Revenue By : Shri Manas Mondal, Dr Date Of Hearing: 17.09.2025 Date Of Pronouncement: 15.10.2025

For Appellant: Shri S. Jhajharia, ARFor Respondent: Shri Manas Mondal, DR

Section 43(5)(d)

confirming the disallowance of ₹93,38,052/- as made by the learned AO in respect of future trading transactions treating the same as speculative loss and the ground no.2 and 3 are without prejudice ground. Ridhi Vincom Pvt. Ltd.; Ay 2013-14 03. The facts in brief are that ... assessee has debited ₹99,35,361/- to the Profit and Loss account out of which 93,38,052/- has been on account of speculative loss suffered by the assessee in future trading transactions in foreign exchange. According to the learned AO the said trading loss suffered in future trading transaction

DCIT 4(3)(1), Mumbai vs. Jm Financial Services Pvt. Ltd., Mumbai

In the result, the appeals filed by the revenue are allowed and the appeals filed by the assessee are allowed for statistical purpose

ITA 6362/MUM/2018[2013-14]Status: DisposedITAT Mumbai14 Oct 2025AY 2013-14

Bench: SHRI NARENDRA KUMAR BILLAIYA (Accountant Member), SHRI PAWAN SINGH (Judicial Member)

Section 255Section 43Section 43(5)Section 73Section 73(4)

upon fulfilling certain conditions, which is the fact in the instant case, loss determined from such share trading has to be deemed as speculation loss and can be set off against speculation income. In the current case, the assessee derives loss from delivery based share trading and fulfills conditions mentioned ... Explanation to Section 73 of the Act treating the loss arising from such transactions as loss from F&O has to be treated as speculation loss and further to emphasize a legal principle that Explanation to Section 73 of the Act operates independently of Section

Jm Financial Services Ltd., Mumbai vs. DCIT - Circle -4(3)(1), Mumbai

In the result, the appeals filed by the revenue are allowed and the appeals filed by the assessee are allowed for statistical purpose

ITA 6114/MUM/2018[2013-14]Status: DisposedITAT Mumbai14 Oct 2025AY 2013-14

Bench: SHRI NARENDRA KUMAR BILLAIYA (Accountant Member), SHRI PAWAN SINGH (Judicial Member)

Section 255Section 43Section 43(5)Section 73Section 73(4)

Jm Financial Services Ltd., Mumbai vs. DCIT - Circle -4(3)(1), Mumbai

In the result, the appeals filed by the revenue are allowed and the appeals filed by the assessee are allowed for statistical purpose

ITA 3175/MUM/2018[2012-13]Status: DisposedITAT Mumbai14 Oct 2025AY 2012-13

Bench: SHRI NARENDRA KUMAR BILLAIYA (Accountant Member), SHRI PAWAN SINGH (Judicial Member)

Section 255Section 43Section 43(5)Section 73Section 73(4)

DCIT- 4(3)(1), Mumbai vs. Jm Financial Services Ltd., Mumbai

In the result, the appeals filed by the revenue are allowed and the appeals filed by the assessee are allowed for statistical purpose

ITA 3144/MUM/2018[2012-13]Status: DisposedITAT Mumbai14 Oct 2025AY 2012-13

Bench: SHRI NARENDRA KUMAR BILLAIYA (Accountant Member), SHRI PAWAN SINGH (Judicial Member)

Section 255Section 43Section 43(5)Section 73Section 73(4)

Devang Bhupendra Shah, Mumbai vs. Income Tax Officer 32(1)(4), Mumbai

In the result, the appeal of the assessee is allowed

ITA 4218/MUM/2023[2014-15]Status: DisposedITAT Mumbai13 Oct 2025AY 2014-15

Bench: Shri Sandeep Gosain & Shri Prabhash Shankardevang Bhupendra Shah, V/S. Income Tax Officer, Ward – B/9, Neminath Apt., बनाम 32(1)(4), Kautilya Bhavan, Shimpoli Road, Borivali Bandra Kurla Complex, West, Mumbai – 400 092, Bandra (East), Mumbai– Maharashtra 400051, Maharashtra स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aadps1211L Appellant/अपीलार्थी .. Respondent/प्रतिवादी

For Appellant: Shri Rahul Kapadia,ARFor Respondent: Shri Annavaran Kasuri, (Sr. AR)

Section 10(38)Section 143(3)Section 68Section 69C

IN THE INCOME-TAX APPELLATE TRIBUNAL“D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER

DCIT, New Delhi vs. M/S Fiem Industries Ltd., New Delhi

In the result, the appeal of the revenue is dismissed

ITA 3696/DEL/2015[2011-12]Status: DisposedITAT Delhi08 Oct 2025AY 2011-12

Bench: Shri Vikas Awasthy & Shri M. Balaganeshdcit, Vs. M/S. Fiem Industries Ltd, Circle-9(1), D-34, Dsidc Packaging New Delhi Complex, Kirti Nagr, New Delhi-110015 (Appellant) (Respondent) Pan: Aaacf1034E Assessee By : Shri Shailesh Gupta, Ca Revenue By: Ms. Namita Khurana, Cit-Dr (On Rotational Duty) Date Of Hearing 13/07/2025 Date Of Pronouncement 08/10/2025

For Appellant: Shri Shailesh Gupta, CAFor Respondent: Ms. Namita Khurana, CIT-DR

Section 143(3)Section 43(5)Section 80I

with reference to base rate. Therefore the transaction is held to be a speculative transaction & loss arising there from is held to be a speculation loss & accordingly disallowed. The assessee has relied on various case laws. The relevant extracts from the cited judgements are reproduced to understand the correct treatment ... revenue expenditure in the assessment year 1956- 57. The ITO disallowed the claim on the ground that the loss was a speculative loss and, in any event, as the assessee was following the mercantile system, it could not claim the loss in 1956-57. The AAC found that the transaction

ACIT, Circle-26(2), New Delhi vs. Vng Impex P.Ltd, New Delhi

In the result, the appeal filed by the Revenue is dismissed

ITA 5917/DEL/2017[2012-13]Status: DisposedITAT Delhi06 Oct 2025AY 2012-13

Bench: SHRI MAHAVIR SINGH (Vice President), SHRI S. RIFAUR RAHMAN (Accountant Member)

For Appellant: Shri S. Krishnan, AdvocateFor Respondent: Ms. Monika Singh, CIT DR

Section 133(6)Section 143(2)Section 44ASection 68

such shares. In the light of this fact, it is requested that following FIFO method, the loss may not be held to be speculation loss. In any case, since the transactions have led to short- term capital loss, the question of applicability of section 43(5) will not arise ... such shares. In the light of this fact, it is requested that following the FIFO method, the loss may not be held to be speculation loss. In any case, since the transactions have been held to have led to short term capital loss, the question of applicability of section

“speculation loss”

Leading authorities on speculation loss

Judgments citing speculation loss

Smt Rashmi Ramesh Damani, Mumbai vs. DCIT, Circle 17(1), Mumbai

Dalmia Cement (Bharat) Ltd., New Delhi vs. ACIT, Central Circle- 26, New Delhi

Dalmia Cement (Bharat) Ltd., New Delhi vs. ACIT, Central Circle- 26, New Delhi

ACIT Circle 1, Trichy vs. Dalmia Cement Bharat Ltd., Dalmiapuram

ACIT Circle 1, Trichy vs. Dalmia Cement Bharat Ltd., Dalmiapuram

DCIT 4 (3)(1), Mumbai vs. J M Financial Services Ltd., Mumbai

Kirti Milind Ranka, Pune vs. Income Tax Officer, Pune

Vijaya Prakash Nagori, Mumbai vs. ITO Ward 32(2)(1), Mumbai

Assistant Commissioner of Income Tax, Mumbai vs. Nevales Networks Private Limited, Mumbai

ACIT 4(2)(1), Mumbai vs. Glorishine Impex Private Limited, Mumbai

Pcl Foods Pvt. Ltd., Gurgaon vs. Addi CIT, National E- Assesment Centre, New Delhi

J vs. Exports, Maduraivs.DCIT, Ncc-2, Madurai

Ridhi Vincom Pvt. Ltd., Kolkata vs. I.T.O., Ward - 4(1), Kolkata

DCIT 4(3)(1), Mumbai vs. Jm Financial Services Pvt. Ltd., Mumbai

Jm Financial Services Ltd., Mumbai vs. DCIT - Circle -4(3)(1), Mumbai

Jm Financial Services Ltd., Mumbai vs. DCIT - Circle -4(3)(1), Mumbai

DCIT- 4(3)(1), Mumbai vs. Jm Financial Services Ltd., Mumbai

Devang Bhupendra Shah, Mumbai vs. Income Tax Officer 32(1)(4), Mumbai

DCIT, New Delhi vs. M/S Fiem Industries Ltd., New Delhi

ACIT, Circle-26(2), New Delhi vs. Vng Impex P.Ltd, New Delhi