2019 (10) TMI 640 - HC - Income Tax

Loss incurred by the assessee in futures and options i.e. derivatives - speculative transaction - Whether the deeming fiction as per Explanation below section 73(4) of the Act in treating business of sale and purchase of share as speculative transaction can be extended to include business of buying and selling of futures and options? - HELD THAT - The Tribunal has held in favour of the Revenue by placing reliance on the decision of this Court in Commissioner of Income-tax, Delhi-IV Vs. DLF Commercial Developers Ltd. 2013 (7) TMI 334 - DELHI HIGH COURT Appellant does not dispute the fact that the aforesaid decision covers the questions of law raised by the appellant. He, however, submits that a special leave petition is pending before the Supreme Court from the decision of this Court in DLF Commercial Developers Ltd. 2013 (11) TMI 1759 - SC ORDER wherein leave has been granted. He, further, submits that the issue is covered in favour of the appellant by several other decisions of the Calcutta High Court, the Madras High Court, the Gujarat High Court and the Bombay High Court. This submission is, however, disputed by learned senior standing counsel for the respondent/ Revenue. In any event, since this Court has already answered the questions of law raised by the appellant in DLF Commercial Developers Ltd. (supra), we are not inclined to hear this appeal.

Summary

Issues:
1. Whether the loss incurred by the assessee in futures and options can be considered speculative?
2. Can the deeming fiction under section 73(4) of the Act be extended to include futures and options?
3. Does the Explanation below section 73(4) override Explanation (d) of section 43(5) of the Act?

Analysis:

1. The appellant appealed against the Income Tax Appellant Tribunal's order regarding the assessee's loss in futures and options. The Tribunal ruled in favor of the Revenue, citing a previous decision. The appellant's counsel acknowledged the decision but mentioned a pending special leave petition in the Supreme Court. The counsel argued that other High Courts had ruled in favor of the appellant on the same issue. However, the Court, having already addressed the questions in a previous case, declined to hear the appeal and dismissed it.

2. The appellant questioned whether the deeming fiction under section 73(4) could be extended to include futures and options. The Tribunal's decision favored the Revenue, based on a previous ruling. The appellant's counsel referred to a pending special leave petition in the Supreme Court and cited decisions from other High Courts supporting the appellant's position. Despite this, the Court, having already addressed the issue in a prior case, refused to entertain the appeal and dismissed it.

3. The appellant raised the issue of whether the Explanation under section 73(4) overrides Explanation (d) of section 43(5) of the Act. The Tribunal decided in favor of the Revenue, relying on a previous judgment. The appellant's counsel mentioned a pending special leave petition in the Supreme Court and referred to decisions from other High Courts supporting the appellant's stance. However, the Court, having already dealt with the matter in a previous case, declined to hear the appeal and dismissed it.