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TMI Blog2013 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition, inter-alia, of Rs. 10,49,033 to the returned income of Rs. 50,485 as declared by the appellant. b. Your appellant submits that it had determined the total income of Rs. 50,485 as per the provisions of the Income Tax Act. c. Your appellant pleads that the returned income of Rs. 50,485 be accepted and the additions made to such returned income of Rs. 10,49,033 be deleted. 2. DERIVATIVE TRADING LOSS: (a) The id. CIT(S) erred in law and on facts in upholding the A.O.'s action in disallowing the claim of loss of Rs.9,47,087 on derivative transactions by first treating the derivative trading loss as speculation loss and further disallowing the same by holding that such transactions have been carried on NSE before 26.01.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business loss. (ii) No particular expenditure was incurred solely for such activity. (iii) The entire business operation results in one business activity and hence it was not open to apportion a part of the expenses between business and deemed speculation transaction. (iv) No apportionment of expenses could be made on notional basis. (v) Without prejudice to the above, the learned AO has erred in estimating the proportion of expenses incurred for derivative loss on an ad hoc basis and reasons for such estimation cited by him were also insufficient and wrong. (c) Your appellant pleads that the said addition of Rs.2,00,000 be deleted. 4. INTEREST U/S 234B & U/S 234C: (a) The id. CIT(A) erred in law and on facts in upholding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Post 26.1.2006 Proprietary A/c 452853 276008 Proprietary A/c 446489 21804 Other charges 47745 30676 Total 9,47,087 3,28,488" It was in this background that the Assessing Officer was of the considered view that since the condition of notification was not fulfilled prior to 26.1.2006, the losses incurred on such transaction could not be adjusted against the regular business income of the assessee. He, thus disallowed Rs.9,47,087 as loss on speculative transactions though allowed the same to be carried forward. The Assessing Officer further noted that the expenses incurred on speculation or non-speculation business could not be easily segregated but since part of the expenses incurred by the assessee were not relatable to the speculatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of the AR that the analogy of decision in the case of Godrej & Boyce Manufacturing Co. Ltd (supra) would apply is not acceptable as the said decision was interpreting applicability of Rules and not the provisions of Income- Tax Act, 1961. Further, the provisions of section 43(5) (d) is applicable from AY 06-07 is not disputed, but only the transaction which were not carried on recognized stock exchange would be speculative in nature and the transactions which were carried on at the recognized stock exchange i.e. after 26-1-06 would not be regarded as speculative in nature. Therefore, the shares transaction carried on un-recognized would very well fell under the derivative transactions. In view of these facts, this ground of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and development activity as approved by the prescribed authority, under section 35(2AB), which was declined to the assessee, for the period prior to the date of approval by the prescribed authority. The coordinate bench held that as long as prescribed authority has approved the in house R & D facility, whether the expenses was incurred prior to the date of approval or after the said date, entire expense incurred in the relevant previous year was to be allowed as deduction. 6. Learned Departmental Representative, on the other hand, vehemently supports the stand of the authorities below which is broadly to the effect that specific requirements of Section 43(5)(d), which are quite clear and unambiguous, are not satisfied on the facts on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is undisputed position that the stock exchanges, on which the impugned transactions were carried out , were duly notified on 25th January 2006, and that in accordance with the views of the co-ordinate bench in the case of Anand Buildwell (supra), as also with the views of Hon'ble Gujarat High Court in the case of Claris Life sciences (supra), once the approval is granted in the relevant previous year, and in the absence of anything indicated to the contrary, the approval has to be taken as effective from the beginning of the relevant year. The issue is thus covered, in favour of the line of reasoning adopted by the assessee, by decision of the coordinate bench in the case of Anand Brothers (supra) and by Hon'ble Gujarat High Court 's judg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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