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TMI Blog2011 (8) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... h loss is from the speculation business. The total income was assessed at Rs. 13,29,990 in this order. It was inter alia mentioned that a notice under section 154 was issued fixing the case on 27-6-2008 directing the assessee to file its explanation on the aforesaid issue. This notice was not attended to, nor any adjournment application was filed. Therefore, it was held that the assessee had no objection to the addition of Rs. 12,99,783 to the last assessed income. The appeal of the assessee against this order was disposed of by the CIT(Appeals)-XV, New Delhi, on 3-11-2010, in which the order was upheld. It was mentioned that since the assessee did not file any objection or evidence in response to the notice under section 154 issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of Rs. 12,99,783 debited to profit and loss account, is a loss from speculation business, which should have been disallowed and added to the income. 2.1 The case of the ld. counsel is that the issue whether loss on future/option transactions is speculation loss was a matter of debate and discussion when assessment order was passed under section 143(3) on 7-12-2007. Therefore, the mistake could not have been termed as a mistake apparent from record as understood under section 154 of the Act. In this connection, our attention was drawn towards the decision of "J" Bench of Mumbai Tribunal in the case of Dy. CIT v. SSKI Investors Services (P.) Ltd. [IT Appeal No. 3182 (Mum.) of 2004, dated 25-9-2007]. It has been mentioned in this order tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007, before the passing of the order. Therefore, it can be said that a controversy existed at the time of passing the assessment order as to whether the loss, as aforesaid, is speculative loss or not. The subsistence of the controversy leads to an inference that the order cannot later be rectified by invoking the provision contained in section 154 of the Act. In this connection, reliance has been placed on the decision of Hon'ble Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50. The issue in this case was whether the case of the assessee firm was caught within the mischief of section 17(1) of the 1922 Act, which contains the following provision:- "Where a person is not resident in the taxable territories an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision on a debatable point of law is not a mistake apparent from record. Further, reliance has been placed on the decision of Hon'ble Delhi High Court in the case of CIT v. Richa & Co. [2001] 252 ITR 40/[2002] 120 Taxman 671. In this case, an intimation was sent to the assessee under section 143(1)(a). Subsequently, action under section 154 was initiated for re-computing deduction under section 80HHC. The Hon'ble Court mentioned that the deduction of claim made under section 80HHC could not have been changed by way of prima facie adjustment under section 143(1)(a), hence, there was no mistake in the order of intimation which could be rectified under section 154. Reliance has also been placed on the decision of Hon'ble Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2005, with effect from 1-4-2006 and a clause (d) has been introduced that an eligible transaction in respect of trading in derivatives referred to in clause (ac) of section 2 of the Securities Contract (Regulation) Act, 1956, carried out in a recognized stock exchange shall not be deemed to a speculative transaction. This amendment is prospective in nature. This amendment in the Act was made prior to the date of passing of the assessment order. The amendment clearly shows that prior to assessment year 2006-07, trading in derivative was a speculative transaction. Therefore, it is argued that a patent mistake of law was made while passing the assessment order. 4. We have considered the facts of the case and submissions made bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making the assessment a controversy existed in the matter. Other decisions relied upon by him follow this decision. All these decisions stand overruled by the decision of Special Bench of the Tribunal in the case of Shree Capital Services Ltd. (supra). However, this decision was rendered on 31-7-2009. In this case, the earlier decisions in the matter, the provision contained in section 2(ac) of the Securities Contract (Regulation) Act, 1956, and amendment made in section 43(5) by the Finance Act, 2005, were considered. It has been held that transactions in derivatives constitute speculative transactions for and up to assessment year 2005-06. The amendment is not clarificatory in nature and it acts prospectively. The decision in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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