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Issues involved:
The judgment deals with the issue of treating a loss as a speculative transaction under section 43(5)(d) of the IT Act, and whether the loss from future and option transactions can be set off against profits from other businesses. Details of the judgment: Issue 1: Treatment of loss as speculative transaction The appellant, a Revenue, challenged the order of the ld. CIT(A) which treated the entire loss as a loss from derivative transactions under section 43(5)(d), despite the loss being also due to trading in shares. The AO found that the assessee had started speculation business and set off speculation loss against profit from food grain business. The assessee claimed that the transactions were through recognized Stock Exchanges and hence not speculative. The ld. CIT(A) accepted the contention, citing relevant case laws, and allowed the appeal of the assessee. Issue 2: Set off of loss from future and option transactions The AO did not allow the set off of speculation loss against profit from food grain business, leading to the appeal before the ld. CIT(A). The assessee argued that the transactions were through recognized Stock Exchanges, making them non-speculative. The ITAT found no infirmity in the ld. CIT(A)'s order, as both parties did not dispute the facts, and the Revenue itself admitted that the loss was due to trading in shares. The ITAT upheld the decision, citing relevant provisions of the IT Act and supporting case laws. In conclusion, the ITAT dismissed the departmental appeal, stating that the loss from future and option transactions through recognized Stock Exchanges cannot be treated as speculative transactions under section 43(5)(d) of the IT Act. The judgment highlights the importance of conducting transactions through recognized Stock Exchanges to avoid speculative treatment of losses.
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