“speculative transaction”

Losses & Set-offSection 43(5)Section 43(5)255 judgments

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

Leading authorities on speculative transaction

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. Punjab Stainless Steel Industries

364 ITR 144 · 2014 · Supreme Court

citing judgments

The Supreme Court holds that ICAI Guidance Notes and accounting methods prescribed by the Institute of Chartered Accountants of India (ICAI) can be relied upon for computing "turnover," especially for tax audit purposes under Section 44AB and for transactions involving shares and derivatives.

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. 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. 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.

Pankaj Oil Mills v. CIT

115 ITR 824 · 1978 · High Court

citing judgments

Hedging contracts related to raw materials for manufacturers are excluded from speculative transactions under Section 43(5) of the Income Tax Act, even if they involve both sales and purchases and are entered into at different times from the delivery of goods.

CIT v. Trishul Investments Ltd.

305 ITR 434 · 2008 · High Court

citing judgments

Interest paid on loans borrowed for the purpose of investment in shares is allowed as part of the cost of acquisition eligible for deduction while computing capital gains under Section 48. The intention of the assessee at the time of acquisition of shares determines the nature of the gain.

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.

Judgments citing speculative transaction

Metal Closures Pvt Ltd, Bangalore vs. ACIT, Circle 4(1)(2), Bangalore

In the result, the appeal of the Revenue is treated as allowed for statistical purpose

ITA 941/BANG/2024[2014-15]Status: DisposedITAT Bangalore29 Jul 2024AY 2014-15

Bench: Shri Chandra Poojari & Shri Prakash Chand Yadavassessment Year: 2014-15

For Appellant: Sri R.E. Balasubramanyam, A.RFor Respondent: Sri Subramanian S., D.R

Section 148Section 28Section 36(2)(i)

Section 10 (w.e.f. 1.4.2010).][* * *] [ Explanation 1 omitted by Act 4 of 1987, Section 28 (w.e.f. 1.4.1989).]Explanation 2. - Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as "speculation business") shall be deemed to be distinct

Rajesh Bhujanga Shetty S, Mumbai vs. Ward 28(2)(5), Mumbai

ITA 1613/MUM/2024[2012-13]Status: DisposedITAT Mumbai18 Jul 2024AY 2012-13

Bench: Shri Satbeer Singh Godara & Shri Girish Agrawal

Section 133(6)Section 139Section 143(3)Section 148Section 234ASection 234B

learned CIT Appeal erred in not considering Contract Summary of Vertex Commodities And Finpro Private Limited statements for FY 2011-12 in respect of speculative transaction of multi commodity exchange and NCDEX Exchange Contract Summary of transaction value were incurred in FY 2011-12 in which assessee has incurred loss

Swan Petrchemicals Pvt. Ltd., Mumbai vs. NFAC Delhi, Delhi

In the result appeal of the assessee is dismissed

ITA 496/IND/2023[2014-2015]Status: DisposedITAT Indore16 Jul 2024AY 2014-2015

Bench: Shri Vijay Pal Rao & Shri B.M. Biyanim/S. Swan Petrochemicals Dcit (Central), Pvt.Ltd, Indore Unit No.308 Acme Plaza, Opp. Sangam Cinema, Vs. Andheri Kurlka, Maharashtra (Appellant / Assessee) (Respondent/ Revenue) Pan: Aabcr9592C Assessee By Shri Ajay Tulsiyan & Ms. Ruchira Singhal, Ars Revenue By Shri Ashish Porwal, Sr.Dr Date Of Hearing 22.05.2024 Date Of Pronouncement 16.07.2024 O R D E R

Section 142(1)Section 271(1)(c)Section 43(5)

assessee has not disputed the fact to the extent that the transactions carried out on MCX resulting loss of Rs.44,57,310/- are speculative transactions. It is manifested from the details of the transactions which are reproduced by the A.O in the assessment order that all these transactions are intra ... synchronized trading carried out by the assessee on MCX however, it is not in dispute that the loss in question has been incurred on speculative transactions carried out by the assessee and therefore, the said claim is impermissible resulting furnishing of incorrect particulars of income by the assessee

The Dy.Commissioner of Income Tax, Circle-1(1)(2), Ahmedabad vs. M/S. Cadila Pharmaceuticals Ltd., Ahmedabad

In the result, Revenue’s appeal is allowed in part

ITA 74/AHD/2020[2010-11]Status: DisposedITAT Ahmedabad01 Jul 2024AY 2010-11

Bench: Shri TR Senthil Kumar (Judicial Member), Shri Narendra Prasad Sinha (Accountant Member)

For Appellant: Parin Shah, A.RsFor Respondent: Dr. Darsi Suman Ratnam, CIT

Section 143(3)Section 35

similar foreign exchange contracts to be business losses than speculative ones. Their lordships conclude that such exchange transactions are hedging transactions instead of being speculative transactions in nature. Next comes hon’ble Bombay high court’s decision in CIT vs. D. Chetan & Co. (2016) 75 taxmann.com 300 (Bom.) holding that ... Mills vs. CIT (1978) 115 ITR 824 (Guj) (Full Bench) also holds inter alia that hedging contracts; in order to be out of speculative transactions, must be in respect of raw materials only in manufacturers’ cases though they could be both with regard to sales and purchases, such hedging contracts

Cadila Pharmaceuticals Ltd., Ahmedabad vs. The Asst. Commissioner of Income Tax, Circle-1(1)(2), Ahmedabad

In the result, Revenue’s appeal is allowed in part

ITA 53/AHD/2020[2010-11]Status: DisposedITAT Ahmedabad01 Jul 2024AY 2010-11

Bench: Shri TR Senthil Kumar (Judicial Member), Shri Narendra Prasad Sinha (Accountant Member)

For Appellant: Parin Shah, A.RsFor Respondent: Dr. Darsi Suman Ratnam, CIT

Section 143(3)Section 35

Agarwal Sponge & Energy Private Limited, Hyderabad vs. Dy. Commissioner of Income Tax, Circle-1(1), Hyderabad

The appeal are dismissed

ITA 59/HYD/2018[2010-11]Status: DisposedITAT Hyderabad28 Jun 2024AY 2010-11

Bench: Shri K. Narasimha Chary & Shri Madhusudan Sawdiaआ.अपी.सं /Ita No.59/Hyd/2018 (निर्धारण वर्ा/Assessment Year: 2010-11) M/S. Agarwal Sponge & Vs. Dy. C. I. T. Energy (P) Ltd., Circle 1(1) Hyderabad Hyderabad Pan:Aaeca8680P (Respondent) (Appellant) निर्धाररती द्वधरध/Assessee By: Shri Sunil Kumar Jain, Ca रधजस्‍व द्वधरध/Revenue By:: Ms. Sheetal Sarin, Dr सुिवधई की तधरीख/Date Of Hearing: 27/05/2024 घोर्णध की तधरीख/Pronouncement: 28/06/2024 आदेश / Order Per Madhusudan Sawdia, A.M: This Appeal Is Filed By Agarwal Sponge & Energy (P) Ltd. (“The Assessee”), Feeling Aggrieved By The Order Passed By The Learned Commissioner Of Income Tax (Appeals)-1, Hyderabad (“Ld.Cit(A)”) Dated 31.08.2017 For A.Y.2010-11. 2. The Assessee Has Raised The Following Concise Grounds: "1. The Order Of The Learned Cit(A) Dated 31/8/2017 Is Contrary To Law & Facts.

For Appellant: Shri Sunil Kumar Jain, CAFor Respondent: : Ms. Sheetal Sarin, DR

Section 115JSection 143(3)Section 234ASection 43

loss is erroneous. The learned Assessing Officer and CIT(A) erred in not accepting the contention that the said amount cannot be treated as speculation transaction as il is exempted under clause (a) of sub- section (5) to section 43 or in the alternative under clause (d) to sub- section ... undertaken by the assessee are covered under the proviso (e) of section 43(5) of the Act and hence it cannot be treated as speculative transaction. Therefore, the Ld. AR requested the Bench to allow the claim of the assessee. 5.3 Per contra, the Ld. DR placed heavy reliance

Simbhaoli Sugars Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is allowed ex-parte

ITA 5181/DEL/2013[2008-09]Status: DisposedITAT Delhi19 Jun 2024AY 2008-09

Bench: Shri Kul Bharat & Shri Pradip Kumar Kedia

For Appellant: NoneFor Respondent: Shri Subhra Jyoti Chakraborty, CIT-DR

Section 143(3)Section 2Section 250Section 43Section 43(5)

loss is not on account of transaction related to commodity or stocks or share hence the same would not fall within the definition of speculative transaction u/s 43(5) of I.T. Act, 1961. The Ld. AR is arguing strongly that even the assessing officer has commented that the loss represents ... loss on for exchange of derivative. The only issue appears to be whether transaction of derivative is covered under speculative transaction u/s 43(5) of I.T. Act. A perusal of section 43(5) reveals that the definition of speculative transaction has been defined as a transaction for purchase or sale

N K Proteins Pvt. Limited, Ahmedabad vs. The Dy. Commissioner of Income Tax, Circle- 3(1)(1), Ahmedabad

In the result, penalty u/s 271(1)(c) of the Act is directed to be deleted and the appeal of the assessee is allowed

ITA 463/AHD/2022[2011-12]Status: DisposedITAT Ahmedabad13 Jun 2024AY 2011-12

Bench: Shri Siddhartha Nautiyal (Judicial Member), Shri Makarand V. Mahadeokar (Accountant Member)

For Appellant: Shri Vartik Choksi, A.RFor Respondent: Shri Ketan Gajjar, CIT-D.R

Section 194HSection 250Section 271(1)(c)Section 40

assessee. When the parties that of purchaser and seller are present and not artificial then the said transaction cannot be treated as speculative transaction and the loss incurred thereon cannot be speculative loss. The contention of the Ld. D.R. that the N. K. Proteins and its client has executed

Krishna Kumar Jalan, Kolkata vs. ACIT, Cir. 28, Kolkata

In the result, appeal of the assessee is allowed

ITA 354/KOL/2024[2015-16]Status: DisposedITAT Kolkata03 Jun 2024AY 2015-16

Bench: Dr. Manish Borad, Hon’Ble

For Appellant: Shri Sanjeev S. Verma, C.AFor Respondent: Shri Arup Chatterjee, Addl. CIT

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

issue of claim of loss from transactions of F&O carried out on the recognised stock exchange and the same is reproduced below:- “(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 ... chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013 (17 of 2013), shall not be deemed to be a speculative transaction:” 4 I.T.A. No. 354/Kol/2024 Assessment Year: 2015-16 Krishna Kumar Jalan 5. Now from perusal of the above Section, I notice that exceptions mentioned

Rushikesh Jagdishchandra Naik, Ghatkopar (East) vs. Income Tax Officer Ward 16(3)(1) Mumbai, Mumbai

In the result, the appeal of the appeal is allowed for statistical purposes

ITA 4850/MUM/2023[2013-14]Status: DisposedITAT Mumbai31 May 2024AY 2013-14

Bench: Shri Prashant Maharishi, Am & Shri Sunil Kumar Singh, Jm Rushikesh Jagdishchandra Naik 10 2Nd Floor, Sandeep Building Income Tax Officer Tilak Nagar, Ward No.16(3)(1) M.P. Vaidya Marg, Ghatkopar Aaykar Bhavan, Vs. East, Rajawadi S.O. Mumbai-400 020 Mumbai-400 077 (Appellant) (Respondent) Pan No. Aaapn7066R : Mr. Satyaprakash Singh, Ar Assessee By Revenue By : Smt. Mahita Nair, Dr Date Of Hearing: 28.05.2024 31.05.2024 Date Of Pronouncement :

For Respondent: Smt. Mahita Nair, DR

Section 142(1)Section 144Section 147Section 148Section 250Section 44ASection 69

available for him to explain the case. We find that assessee stated before him that the estimated profit at the rate of 0.5% on speculative transaction of ₹14.25 crores is not correct. But whatever may be the loss or profit arising on account of such speculation profit may be taxed

DCIT, New Delhi vs. M/S. J.K. Technosoft Ltd., New Delhi

In the result, the Appeal of the Revenue in ITA No

ITA 6160/DEL/2016[2009-10]Status: DisposedITAT Delhi30 Apr 2024AY 2009-10

Bench: Sh. Pradip Kumar Kedia & Sh. Yogesh Kumar U.S.Dcit Vs. J. K. Techno Soft Ltd. Circle 13(2) A-2, Shopping Complex, C. R. Building Masjid Moth, Greater New Delhi Kailsah Part-Ii New Delhi Pan: Aaacj0381L Appellant Respondent Assessee By Shri Neeraj Jain, Adv & Sh. Himanshu Goel, Ca Revenue By Shri Rajesh Mahajan, Sr. Dr Date Of Hearing 18/04/2024 Date Of Pronouncement 30/04/2024 Order

Section 115J

mentioned that the AO has placed reliance on the instruction 3/2010 dated 23.03.2010, issued by CBDT with respect to the speculative transactions, clarifying 6 DCIT Vs. J. K. Technosoft regarding allowing loss on account of Forex derivatives. As per the said instruction the mark to market losses where no sale ... Forex Directive loss declared by the assessee Company 11 DCIT Vs. J. K. Technosoft clearly falls within the definition of speculative transaction defined u/s 43(5) of the act and the speculative losses can only be set off against the speculative profits, the loss

M/S. La Opala RG Ltd., Kolkata vs. DCIT, Cir-12(1), Kolkata.

In the result, both the appeals of the assessee are partly allowed

ITA 965/KOL/2023[2014-15]Status: HeardITAT Kolkata03 Apr 2024AY 2014-15

Bench: Shri Rajpal Yadav & Shri Girish Agrawal

For Appellant: Shri A. K. Tulsiyan, FCAFor Respondent: Shri Prabhakar Prakash Ranjan, Addl. CIT

Section 143(3)Section 250Section 80l

loss of profits at a particular level. It is dealt by Accounting Standards 11. 6.4. Further, assessee claimed that it is not a speculative transaction within the meaning of section 43(5). Assessee placed reliance on the decision of Coordinate Bench of ITAT, Kolkata in the case ... into by the assessee to safeguard against loss arising out of fluctuation in foreign currency, loss of such transaction could not be held as speculative transaction falling within the ambit of section 43(5). 6.5. Assessee also contended that in the preceding years

M/S. La Opala RG Ltd., Kolkata vs. DCIT, Cir-12(1), Kolkata-12(1), Kol., Kolkata

In the result, both the appeals of the assessee are partly allowed

ITA 964/KOL/2023[2013-14]Status: HeardITAT Kolkata03 Apr 2024AY 2013-14

Bench: Shri Rajpal Yadav & Shri Girish Agrawal

For Appellant: Shri A. K. Tulsiyan, FCAFor Respondent: Shri Prabhakar Prakash Ranjan, Addl. CIT

Section 143(3)Section 250Section 80l

Concept Images Pvt. Ltd., Kolkata vs. DCIT, Cir-7(1), Kolata., Kolkata

In the result, the appeal of the assessee stands allowed

ITA 1201/KOL/2023[2012-13]Status: DisposedITAT Kolkata22 Mar 2024AY 2012-13

Bench: Shri Sanjay Garg & Rajesh Kumari.T.A No.1201/Kol/2023 Assessment Year: 2012-13 Concept Images Pvt. Ltd…………………………… ........................……Appellant 4Th Floor, Azimganj House, 7, Camac Street, Circus Avenue, S.O., Kolkata – 700017. [Pan: Aabcc1959L] Vs. Dcit, Circle-7(1), Kolkata...................…................…........……...…..…..Respondent Appearances By: Shri Anil Kochar, Advocate, Appeared On Behalf Of The Appellant. Shri Ankur Goyal, Jcit-Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : January 10, 2024 Date Of Pronouncing The Order : March 22, 2024 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 19.10.2023 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. The Sole Issue Raised In This Appeal Is As To Marked To Market Loss Incurred By The Assessee On Hedging Of The Transaction Is To Be Treated As Speculative Loss Or Normal Business Loss. 3. The Brief Facts Of The Case Are That The Assessee Is In Business Of Purchase & Sale Of Bullions & Also Manufacturers Of Gold Ornaments. Since The Price Of Gold Constantly Fluctuates, To Safeguard Itself From Loss, If Any, Due To Fluctuation The Appellant Had Entered Into Future Contracts With The Suppliers Of Gold To Safeguard Against Loss

Section 250Section 37Section 43(5)

finding to this effect in its order. The Assessing Officer has not considered these facts. Under section 43(5) of the Income-tax Act, "speculative transaction" has been defined to mean a transaction in which a contract for the purchase or sale of a commodity is settled otherwise than

DCIT, Corporate Circle, Madurai vs. M/S Standard Match Indusries Private Limited, Sivakasi

The appeal stand allowed for statistical purposes

ITA 485/CHNY/2023[2009-10]Status: DisposedITAT Chennai22 Mar 2024AY 2009-10

Bench: Hon’Ble Shri Mahavir Singh, Vp & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपील सं./ Ita No.485/Chny/2023 (िनधा)रण वष) / Assessment Year: 2009-10) Dcit M/S. Standard Match Industries Pvt. Ltd. बनाम/ Corporate Circle 5-2-15C, Sattur Road, Vs. Madurai. Sivakasi-626 123. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaccs-5742-A (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri R. Clement Ramesh Kumar (Cit)- Ld. Dr " थ"कीओरसे/Respondent By : Shri S. Sridhar (Advocate) -Ld. Ar सुनवाईकीतारीख/Date Of Final Hearing : 31-01-2024 घोषणाकीतारीख /Date Of Pronouncement : 22-03-2024 आदेश / O R D E R

For Appellant: Shri R. Clement Ramesh Kumar (CIT)- Ld. DRFor Respondent: Shri S. Sridhar (Advocate) -Ld. AR

Section 143(3)Section 37(1)Section 43(5)Section 73

business loss thereby over viewing the fact that when no actual delivery has taken place, the transactions in question fall within the definition of speculative transaction as per section 43(5) of the Income-Tax Act? 4. Whether on the facts and in the circumstances of the case ... Section 73(1) of the Act restricts the set off of speculation loss against the other business income in only those cases were speculative transaction carried on by the company. The assessee also relied on various judicial decisions to support the submissions. 4.3 The assessee’s submission were subjected

Mukesh Kumar Ranka, Indore, Madhya Pradesh vs. Assistant Commissioner of Income Tax, Central Circle, Ujjain, Madhya Pradesh

Appeals are allowed

ITA 98/IND/2024[2018-19]Status: HeardITAT Indore21 Mar 2024AY 2018-19

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

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

very important to adjudicate this issue. Therefore, the question is when the search took place, the assessee’s transactions (in this case, the speculative transaction) has been found to be recorded in the “other documents” which is (retrieved from the assessee’s accountant’s drawer) and based on that

Mukesh Kumar Ranka, Indore, Madhya Pradesh vs. Assistant Commissioner of Income Tax, Central Circle, Ujjain, Madhya Pradesh

Appeals are allowed

ITA 97/IND/2024[2017-18]Status: HeardITAT Indore21 Mar 2024AY 2017-18

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

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

Anju Jain, Lr Shri Sushil Jain, Indore, Madhya Pradesh vs. Assistant Commissioner of Income Tax, Central Circle, Ujjain, Madhya Pradesh

Appeals are allowed

ITA 104/IND/2024[AY 2017-18]Status: HeardITAT Indore21 Mar 2024

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

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

Anju Jain, Lr Sushil Jain, Indore, Madhya Pradesh vs. Assistant Commissioner of Income Tax, Central Circle, Ujjain, Madhya Pradesh

Appeals are allowed

ITA 103/IND/2024[AY 2018-19]Status: HeardITAT Indore21 Mar 2024

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

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

Lupin Ltd., Mumbai vs. The Dy CIT, Circle-3(4), Mumbai

In the result, the appeal of the assessee in I

ITA 77/MUM/2021[2013-14]Status: DisposedITAT Mumbai18 Mar 2024AY 2013-14

Bench: Shri Pavan Kumar Gadale, Jm & Ms Padmavathy S, Am

For Appellant: Shri Rajan Vora, Shri PranayFor Respondent: Ms. Manju Thakur, Sr. DR

Section 10ASection 115JSection 143(3)Section 154Section 271(1)(c)Section 37(1)

would not by itself determine whether the activity was a part of the Respondent- assessee's regular business transaction or it was a speculative transaction. On present facts, it was never the Revenue's contention that the transaction was speculative but only disallowed on the ground that it was notional