“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

DCIT-Central Circle-2, Faridabad vs. A2Z Infra Engineers Ltd., Gurgaon

In the result, the appeal of the assessee is allowed

ITA 812/DEL/2019[2012-13]Status: DisposedITAT Delhi28 Mar 2023AY 2012-13

Bench: Shri Pradip Kumar Kedia & Shri Anubhav Sharma

For Appellant: Ms. Ritu Kamal KishoreFor Respondent: Shri P. Praveen Sidharth, CIT-DR

Section 132Section 132(4)Section 153ASection 271(1)(c)Section 274

under Section 271(1)(c) of the Act. In the first appeal, the CIT(A) deleted the penalty imposed on account of speculative loss but however sustained the penalty on disallowance of deduction claimed under Section 35D of the Act. 18.1 The appeal of the Revenue against the partial relief ... Similar to ITA 941/D/2019 supra, the CIT(A), in first appeal, granted partial relief and deleted penalty imposed on account of speculative loss. 23. The assessee is in appeal before Tribunal against the penalty of Rs.1,87,47,620/- on account of disallowance of deduction of Rs.5

DCIT CC-2, Faridabad vs. A2Z Maintenance and Engineering Services Ltd., Gurgaon

In the result, the appeal of the assessee is allowed

ITA 811/DEL/2019[2011-12]Status: DisposedITAT Delhi28 Mar 2023AY 2011-12

Bench: Shri Pradip Kumar Kedia & Shri Anubhav Sharma

For Appellant: Ms. Ritu Kamal KishoreFor Respondent: Shri P. Praveen Sidharth, CIT-DR

Section 132Section 132(4)Section 153ASection 271(1)(c)Section 274

A2Z Maintenance & Engineering Services Ltd., Gurgaon vs. DCIT, Central Circle-II, Faridabad

In the result, the appeal of the assessee is allowed

ITA 2631/DEL/2018[2008-09]Status: DisposedITAT Delhi28 Mar 2023AY 2008-09

Bench: Shri Pradip Kumar Kedia & Shri Anubhav Sharma

For Appellant: Ms. Ritu Kamal KishoreFor Respondent: Shri P. Praveen Sidharth, CIT-DR

Section 132Section 132(4)Section 153ASection 271(1)(c)Section 274

Shri Raghav Aggarwal, Jammu vs. Income Tax Officer Ward-1 (2), Jammu

In the result, the appeal of the assessee bearing ITA No

ITA 568/ASR/2019[2014-15]Status: DisposedITAT Amritsar02 Mar 2023AY 2014-15

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 143(3)Section 250Section 43(5)

grossly erred in law and on facts of the case by upholding the addition of Committee loss amounting to Rs 7,50,000/- as speculation loss not treated as business expenditure.. 2. That the appellant craves to leave to add, amend, modify, delete any of the grounds of appeal ... appeal before the ld. CIT(A). The ld. CIT(A) upheld the addition amount of Rs.7,50,000/- and treated as loss as a speculative loss u/s 43(5). Being aggrieved assessee filed an appeal before us. 3. The ld. counsel for the assessee filed a written submission which

Dhanpat Raj Khatri - HUF, Jaisalmer vs. ITO, Jaisalmer

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

ITA 8/JODH/2020[2014-15]Status: DisposedITAT Jodhpur24 Jan 2023AY 2014-15

Bench: Shri B. R. Baskaran & Shri Sandeep Gosainshri Dhanpat Raj Khatri Vs The Ito Khatri Pada, Jaisalmer Jaisalmer

Section 148Section 68

case and submissions of the appellant the AO noted that the assessee was engaged in transaction in MCX & NCDEX and BSC and declared speculation loss in of Rs. (-)51,77,385/- and assessee HUF declared his income in his ITR from business and profession of Rs. 1,52,160/- during

M/S Ramavtar Krishanavtar, Kota vs. Income Tax Officer, Kota

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

ITA 214/JPR/2018[2014-15]Status: DisposedITAT Jaipur05 Jan 2023AY 2014-15

Bench: Hon’ble SHRI SANDEEP GOSAIN (Judicial Member)

For Appellant: Shri Saurav Harsh, AdvocateFor Respondent: Smt. Monisha Choudhary, JCIT

Section 143(2)Section 234ASection 43Section 43(5)(e)

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 ... 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

Beni Prasad Lahoti, Howrah vs. DCIT, CC-2(2), Kolkata

In the result, all the appeals of the assessee are allowed

ITA 306/KOL/2022[2012-13]Status: DisposedITAT Kolkata27 Dec 2022AY 2012-13

Bench: Shri Rajpal Yadav, Vice-(Kz) & Shri Girish Agrawal

Section 132Section 132(4)Section 139Section 14ASection 153ASection 271(1)(c)

Assessment Years: 2008-2009, 2009-10, 2010-2011, 2012-2013 Beni Prasad Lahoti Assessed income Rs.60,33,000/- Sl. Particulars of Amount addition 1. Speculation loss Rs.28,83,322/- disallowed 2. Disallowance under Rs. 9,60,489/- section 14A Penalty proceedings were initiated in respect of the income disclosed under ... section 132(4) of Rs.6,00,000/- and disallowance of speculation loss of Rs.28,83,322/- .The disallowance of speculation loss of Rs.28,83,6322/- was deleted by the CIT(A). Asst. Year: 2012-13 Returned income under Rs. 1,68,765/- section 139 Returned income under

Beni Prasad Lahoti, Howrah vs. DCIT, CC-2(2), Kolkata

In the result, all the appeals of the assessee are allowed

ITA 302/KOL/2022[2008-09]Status: DisposedITAT Kolkata27 Dec 2022AY 2008-09

Bench: Shri Rajpal Yadav, Vice-(Kz) & Shri Girish Agrawal

Section 132Section 132(4)Section 139Section 14ASection 153ASection 271(1)(c)

Rupesh Bahilal Sharma, Mumbai vs. ITO 23 (3)(2), Mumbai

In the result, both the appeals filed by the assessee are allowed

ITA 6983/MUM/2019[2005-06]Status: DisposedITAT Mumbai07 Dec 2022AY 2005-06

Section 131Section 132Section 143(1)Section 147Section 148Section 69

Mihir Agencies P Ltd Etc- all run by Mr. Mukesh Chokshi) were engaged in fraudulent billing activities and in the business of providing bogus speculation loss, short term/long term capital gain/ loss, share application money, commodities profit/loss on commodity trading through MCX and had been continuing this business for many

Income Tax Officer-26(2) (1), Mumbai vs. Narendra Bhabutmal Mehta, Mumbai

In the result, the appeal filed by the revenue stands dismissed

ITA 1817/MUM/2022[2012-13]Status: DisposedITAT Mumbai30 Nov 2022AY 2012-13

Bench: Shri Amit Shukla, Jm आयकरअपीलसं./ I.T.A. No. 1817/Mum/2022 (निर्धारणवर्ा / Assessment Year: 2012-13) Ito-26(2)(1), Narendra Bhabutmal Mehta, Kautilya Bhavan, Room No. बिधम/ 402, Navare Appt. Swami 315, 3Rd Floor, Bandra Kurla Vs. Vallabhdas Sion West, Complex, Bandra (East), Mumbai-400 022 Mumbai-400 051 स्थायीलेखासं./जीआइआरसं./ Pan No. Adxpm3744P (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant By : Shri Narendra Mehta, Ld. Ar प्रत्यथीकीओरसे/Respondent By : Ms. Neeta Jeph, Ld. Dr सुनवाईकीतारीख/ : 01.09.2022 Date Of Hearing घोषणाकीतारीख / : 30.11.2022 Date Of Pronouncement आदेश / O R D E R Per Amit Shukla: The Aforesaid Appeal Has Been Filed By The Revenue Against The Impugned Order Dated 12.03.2022, Passed By National Faceless Appeal Centre (Nfac), Delhi For The Quantum Of Assessment Passed U/S 147/144 For Ay 2012-13. 2

For Appellant: Shri Narendra MehtaFor Respondent: Ms. Neeta Jeph, Ld. DR

Section 142(1)Section 147Section 68Section 69Section 69C

Before us, Ld. Counsel submitted that neither the assessee had made any payment nor has received any amount and it was the nature of speculation loss and there was no delivery of shares. 6. From the perusal of the assessment order, I find that AO has neither verified the documents

Prafulla Jayantilal Ganger, Mumbai vs. ITO WD 3(2), Mumbai

Accordingly, Appeal by the Assessee is allowed

ITA 1936/MUM/2021[2011-12]Status: DisposedITAT Mumbai29 Nov 2022AY 2011-12

For Respondent: Ms. Neeta Jeph

Section 143(3)Section 147

consideration of Rs.5,01,024/- and sold the shares on the very same day at a consideration of Rs.4,88,848/- and accordingly, speculation loss of Rs.12,176/- was declared in the return of income of the Appellant. 5. Before, the Assessing officer, the Assessee has submitted various documents ... consideration of Rs. 5,01,024/- on 14.01.2011; and on the same day was sold at Rs. 4,88,848/-. Thus, Assessee incurred speculation loss of Rs. 12,176/-. It was intraday transaction which was speculative in nature as there was no delivery of share. There is no benefit

Bharat Mines and Minerals, Bangalore vs. Assistant Commissioner of Income Tax, Circle-1(2)(1), Bangalore

In the result, the assessee’s appeal is partly allowed for statistical purposes

ITA 974/BANG/2022[2011-12]Status: DisposedITAT Bangalore23 Nov 2022AY 2011-12

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year: 2011 – 12

For Appellant: Shri K.R. Pradeep &For Respondent: Shri A. Ramesh Kumar, D.R

Section 10BSection 142(1)Section 143(2)Section 143(3)

assessee to enter into forex derivative contract as a separate business. (xi) Section 73(1) of the Act restricts the set off of speculation loss against the other business income in only those cases were speculative transactions carried on by the assessee• are of such nature so as to constitute

Deputy Commissioner of Income Tax, Circle- 4(1)(1), Bangalore vs. M/S. Lifestyle International Private Limited, Bangalore

In the result, the assessee’s appeal stands allowed and revenue’s appeal stands dismissed

ITA 93/BANG/2020[2013-14]Status: DisposedITAT Bangalore18 Nov 2022AY 2013-14

Bench: Smt Beena Pillai & Shri Laxmi Prasad Sahuassessment Year : 2013-14 M/S. Lifestyle International Pvt. Ltd., 77, Town Centre, The Deputy Building No. 3, Commissioner Of West Wing, Income Tax, Off Hal Airport Road, Circle – 4(1)(1), Yamlur, Vs. Bengaluru. Bengaluru – 560 037. Pan: Aaacl2937J Appellant Respondent & Assessment Year : 2013-14 (By Revenue)

Section 2Section 37Section 43(6)(c)Section 50B

same. 2.2. The learned CIT(A) upheld the order passed by the learned AO in disallowing hedging loss, by treating the same as speculative loss. 2.3. The learned CIT(A) and the learned AO failed to appreciate that the definition of a "speculative transaction" does not include a derivative transaction ... hence Mark to Market ["MTM"] losses from derivative transactions is not a speculative loss. 2.4. The learned CIT(A) and the learned AO failed to appreciate the view of the Appellant that instruction no. 17/2008 dated 26 November 2008 and 03/2010 dated 23 Page

Ganesh Chhganlal Jain, Mumbai vs. CIT (A), NFAC, Delhi

In the result, the appeal filed by the assessee is allowed for In the result, the appeal filed by the assessee is allowed for In the result, the appeal filed by the assessee is allowed for statisti...

ITA 2101/MUM/2022[2012-13]Status: DisposedITAT Mumbai18 Oct 2022AY 2012-13

Bench: Shri Om Prakash Kant () & Shri Rahul Chaudhary () Assessment Year: 2012-13 Ganesh Chhganlal Jain, Cit (A) Nfac, Plot No. 899 Jassawala Wadi, Delhi. Juhu Tara Road, Juju, Vs. Andheri West, Mumbai-400049. Pan No. Aanpj 1550 D Appellant Respondent Assessee By : Mr. Pramod Kumar Parida, Ar Revenue By : Mr. Sanyam Suresh Joshi, Dr Date Of Hearing : 12/10/2022 Date Of Pronouncement : 18/10/2022

For Appellant: Mr. Pramod Kumar Parida, ARFor Respondent: Mr. Sanyam Suresh Joshi, DR

Section 143(1)Section 148

total income declared by the assessee included . The total income declared by the assessee included salary of ₹43,29,600/ 43,29,600/- speculation loss and (-)₹1,43,497/ 1,43,497/-) income from business or profession from business or profession (Nil); short term capital gain ( short term capital gain

Sotc Travel Services P.Ltd, Mumbai vs. DCIT RG 3(3)(1), Mumbai

In the result, appeal by the assesse is allowed for statistical purpose

ITA 3656/MUM/2016[2009-10]Status: DisposedITAT Mumbai10 Oct 2022AY 2009-10

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Madhur Agrawal &For Respondent: Shri Chetan M. Kacha

Section 14Section 14ASection 250Section 254(1)Section 40

facts in upholding order of AO treating Mark to Market Loss of Rs. 4,60,56,154/- on year end open forward contracts as speculation loss on the ground that it is not a crystallized loss and notional in nature. The reasons given by him for doing so are wrong ... No.3656/Mum./2016 year and actual profit/loss is accounted on crystallization of contract and hence Mark to Market loss cannot be deemed as speculation loss or notional loss. 3. Disallowance u/s 14 A (i) The Ld. CIT (A) erred in law and facts in upholding the disallowance

The Deutsche Investments India P.Ltd, Mumbai vs. Pr CIT 12, Mumbai

In the result, appeal of the assessee is allowed

ITA 3169/MUM/2017[2011-12]Status: DisposedITAT Mumbai30 Sept 2022AY 2011-12

Section 143(3)Section 263Section 92C

Deutsche Investments India Pvt. Ltd., CTR 127) holding that losses arising out of transactions in futures and options are in the nature of speculation losses in terms of section 73 of the Act, should not be applied. In response, assessee submitted that it is a nonbanking financial company and provisions

DCIT Cir 4 (2)(1), Mumbai vs. M/S Quant Securities Pvt Ltd., Mumbai

In the result, the appeal of the revenue is dismissed

ITA 7756/MUM/2019[2014-15]Status: DisposedITAT Mumbai02 Sept 2022AY 2014-15

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

decided in this appeal is as to whether the ld. CIT(A) was justified in treating the share trading loss as not speculative loss on the ground that provisions of Explanation to Section 73 of the Act are not applicable to the assessee in the facts and circumstances ... which had resulted in loss of Rs 1,13,24,176/- in own trading in shares. This loss was sought to be treated as speculation loss in accordance with provisions of Explanation to Section 73 of the Act, by the ld. AO, for which show cause notice was issued

DCIT, CC- 7(1), Mumbai vs. Classic Shares and Stock Broking Services Ltd., Mumbai

ITA 4679/MUM/2018[2002-03]Status: DisposedITAT Mumbai01 Sept 2022AY 2002-03

For Appellant: Shri Rajiv KhandelwalFor Respondent: Dr. P. Daniel

Section 143(3)Section 154Section 254Section 263Section 73

under: 1. Whether on the facts and in the circumstances of the case and in law, Ld CIT(A) was justified in allowing the speculation loss of Rs. 1,47,77,850/- as per provisions of section 73 of the Income Tax Act, which are not genuine in nature ... word „deleted‟ in the last line of paragraph 5.33 of the order dated 13.01.2017 passed by the CIT(A) and has thereby allowed speculative loss of INR 1,47,77,850/- to the Appellant without appreciating that speculation loss of Rs. 1,47,77,850/- was not genuine in nature

M/S. Loop Mobile Holdings Pvt. Ltd, Mumbai vs. DCIT 7(1) (7), Mumbai

ITA 1077/MUM/2022[2012-13]Status: DisposedITAT Mumbai25 Aug 2022AY 2012-13

Bench: Shri Kuldip Singh & Shri Om Prakash Kantassessment Year: 2012-13

For Appellant: Shri Ganesh Rajgopalan, A.RFor Respondent: Ms. Shailaja Rai, D.R

Section 143(3)Section 73

Income Tax (Appeals) erred in affirming the Assessing Officer's treatment of loss due to diminution in the value of stock-in-trade as speculative loss of Rs.1,576,84,89,508/- under section 73 of the Income Tax Act, 1961. 4. Without prejudice to the above ground ... Income Tax Act, 1961 (for short ‘the Act’) as under: computed as under: -4208695095 Business loss as per revised return Add speculation loss 1 5768489508 Add car hire charges 747585 Add Business support expenses 39588805 33045059 Add Legal Et professional fee Assessed business income 11633175862 3621203600 Short term capital gain

DCIT 14(1)(1), Mumbai vs. Blue Berry Trading Co P.Ltd, Mumbai

In the result appeal of the Revenue is dismissed

ITA 3568/MUM/2016[2011-12]Status: DisposedITAT Mumbai08 Aug 2022AY 2011-12

Section 143(3)Section 73

erred in holding that loss of Rs.2,96,91,090/- and loss on account of Mark to Market amounting to Rs.1265977/- are not speculation loss in view of explanation Section 73 of the I.T.Act, 1961." 3. The appellant craves leave to add, amend, vary, omit or substitute ... assessment proceedings had sought to treat the loss on sale of aforesaid shares, futures and options amounting to Rs.8,28,91,018/- as speculation loss by applying the provisions of Explanation to Section 73 of the Act. In effect, the assessee had claimed the aforesaid loss as „business loss