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TMI Blog2012 (8) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Act As decided in CIT Vs. Shri Bharat R.Ruia [2011 (4) TMI 37 - BOMBAY HIGH COURT] future & option are one of the categories of derivatives and loss suffered by the assessee during future & option transactions is not a speculative loss thus, the same can be set off against short term capital gains by the assessee during the relevant assessment year - in favour of assessee. - ITA Nos.1286 & 1287/Mds/2011 - - - Dated:- 28-6-2012 - SHRI N.S.SAINI, AND SHRI VIKAS AWASTHY, JJ. Appellant by : Mr. Shaji P.Jacob, Addl. CIT Respondent by : Mr. V.Ravichandran, FCA O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: The present two appeals i.e. ITA Nos.1286 1287/Mds/2011 have been filed by the Revenue against the order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders, the assessee has filed separate appeals before the CIT(A), wherein the CIT(A) has held as under:- As to the quantum of the transactions, the following facts are worth considering: For the assessment year 2007-08, the appellant has declared short term capital gains of Rs.60.48 lacs (Rs. 144.66 lacs in 2006-07) and long term capital gain of Rs. 150.17 lacs (Rs. 57.95 lacs in 2006-07). The ratio of F O (net value) of Rs.44.91 lacs (Rs.36.38 lacs in 2006-07) worked out to about 4% (6% in 2006-07) of the total value of sale of shares during the year. All the transactions have been handled thru registered stock brokers of recognized stock exchanges after paying the Securities Transaction Tax. His holding of shares was to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment transactions and not business/speculative transactions and decide the appeal in favour of the appellant allowing the loss incurred by him in the F O transactions to be adjusted with other short term capital gains made during the respective years. Accordingly, the appeals of the appellant on this ground stand allowed. The CIT(A) allowed the appeals of the assessee holding that futures options transactions of the assessee are not business or speculative transactions. Therefore, the loss suffered by the assessee in futures options transactions can be adjusted with other short term capital gains during the respective years. 4. Aggrieved against the findings of the CIT(A), the Revenue has come in appeal before the Tribunal fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been excluded from the ambit of speculative transactions in pursuance to the amendment to the provisions of section 43(5)(d). He further pointed out that as per Circular No.3/2006 dated 27.02.2006(supra), the amendment is applicable with effect from assessment year 2006-07 onwards. Further, in order to support his contentions that trading in futures options is not speculative transaction, he relied on the order of the Mumbai Bench of the Tribunal in the case of Pradeep Kumar Harlalka Vs. ACIT., reported as 47 SOT 204(Mum). 7. We have heard the submissions made by the parties and have gone through the documents on record and the judgements relied on by the respective parties. Finance Act, 2005 has brought an amendment clarifying the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions is eligible for set off against capital gains during the respective years. The Mumbai Bench of the Tribunal in the case of Gajendra Kumar T.Agarwal Vs. ITO reported as 2011 TIOL 337 ITAT (Mum) has held as under:- 27. As a result of the amendment in Section 43(5) with effect from 1st April 2006, losses incurred in derivative trading are held to be eligible for being set off against normal business profits, as derivate trading itself is treated as a non- speculative business, and losses of any non- speculative businesses can be adjusted profits of any non-speculative business. Ironically, however, this apparently well- intended measure of relief to the assessee has resulted in an absurd situation in which past losses of deriv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Stovin [1889] 22 CBD 513 referred to in S. Teja Singh s case (supra). If the choice is between two interpretations, the narrower of which would fail to achieve the manifest purpose of the legislation we should avoid. Whenever it is possible to do so, it must be done to construe the provisions which appear to conflict so that they harmonise. It should not be lightly assumed that Parliament had given with one hand what it took away with the other. 8. The Hon ble Bombay High Court in the case of Shri Bharat R.Ruia(HUF) (supra) has held that future option are one of the categories of derivatives. On the contrary, the judgement relied on by the D.R. in the case of Abdul Gani Haji Abib Vs. CIT (supra) is not applicable in the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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