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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 ..... of assessment under section 143(3) of the Income tax Act, 1961, for the assessment year 2006-07, on the following grounds as set out in the Memorandum of appeal: 1. ASSESSMENT OF INCOME a. The Ld CIT(A) erred in law and on facts in confirming 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 26.01.2006, the date on which recognition was granted for conducting eligible transactions . (b) Your appellant submits that (i) Transactions have been incurred on recognized stock exchange and fulfill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation of the provision of Natural Justice in as much as no opportunity for hearing was given. (c) Your appellants pray that the interest levied be deleted. 2. To adjudicate on this appeal, only a few material facts need to be taken note of. The assessee is engaged in the business of dealing in shares and securities, including derivatives. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has incurred losses in derivatives segment on the National Stock Exchange. He further noted that the National stock Exchange was granted recognition, in terms of sub-clause (ii) in the explanation to clause (d) of proviso to Section 43(5) of the Income tax Act, by the Central Government on 25th January, 2006. He apparently proceeded on the basis that transactions entered into by the assessee prior to this date will be treated as speculative transactions as the NSE was not a notified stock exchange for the relevant period, while transactions entered into after this date will be treated as non-speculative transactions. He, accordingly, segregated the losses incurred in derivatives as follows: Prior to 26.1.2006 Post 26.1.2006 Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 appeal of appeal is treated as dismissed. 3. The assessee is not satisfied by the stand so taken by the CIT(A) and is in further appeal before us. 4. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 5. We find that the issue is squarely covered by a co-ordinate Bench of this Tribunal in the case of Prem Associates Advertising Marketing vs JCIT (ITA No. 6547/Mum/2009- Assessment year 2006-07) dated 17.9.2010, wherein, the coordinate bench, speaking through one of us, i.e. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification is with effect from the date of publication in the official gazette . It cannot, therefore, be contended that the notification can have a retrospective effect. In effect thus, the eligible transactions carried out at the stock exchanges, which were not notified till the date of transaction, cannot be said to have been carried out at recognized stock exchanges . The mandate of the Section 43(5)(d) is clearly not satisfied in this situation, and, accordingly, these transactions will not be covered by the exclusion clause set out in section 43(5)(d). On the strength of this line of reasoning, learned Departmental Representative urges us to hold the orders of the authorities below and decline to interfere in the matter. 7. We find that i 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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