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TMI Blog2015 (6) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... ion were notified on 25th January, 2006. It was the case of the assessee that the transaction conducted by it from July 2005 to September, 2005, cannot be rejected for the benefit of proviso (d) to sub-section 5 of Section 43(5) as there was a provision on the statute in the shape of clause (d). The lapse in the issue of notification etc. was only on account of delay by CBDT. It is in these circumstances, the Hon’ble High Court has upheld the order of the Tribunal vide which the relief was given to the assessee. Thus, in that case, there was a provision on the statute under which the assessee sought the benefit. However, in the present case, as mentioned earlier, provisions of clause (e) of the proviso to Section 43(5) did not exist during the period when the assessee carried out the transactions. Thus the assessee is not entitled to claim the benefit of clause (e) of the proviso to Section 43(5) of the Act - Decided against assessee. - ITA No.6534/Mum/2012 - - - Dated:- 17-1-2014 - SHRI I.P.BANSAL SHRI D.KARUNAKARA RAO, JJ. For the Appellant : Mr. Jitendra Jain Mr. Ravikant S. Pathak For the Respondent :: Mr. Ravi Prakash ORDER PER I.P.BANSAL (J.M.) : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO did not accept the contention of the assessee as according to the AO Proviso to Section 43(5) states that the trading in derivatives carried out in a recognized exchange will not be deemed to be speculative transaction. According to the AO the words recognized stock exchange is dealt within the Explanation (ii) to Clause (d) of sub-section (5) of Section 43, which reads as under :- (ii) recognized stock exchange means a recognized stock exchange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified by the Central Government for this purpose. 4. Referring to the aforementioned Explanation, the AO observed that the exchange namely MCX is not a recognized stock exchange during the year under consideration. The notification on which the assessee had relied upon is issued on 22-5-2009, which pertained to financial year 2009-10 and not to assessment year 2009-10. In this manner, learned AO has held that the assessee is not eligible to consider the said loss as normal business loss. Another reason given by the AO is that in the audit report, which was at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, especially after 1-4-2006. 7. Reliance was placed on another decision of the Hon ble Delhi High Court in the case of CIT Vs. Nasa Finelease P Ltd., passed in ITA No.647/2012 vide order dated 6-9-2013, copy of which has also been placed on record and was given to the learned DR. In that case, a loss of ₹ 1.90 crores was shown in derivative transaction. The AO disallowed the said loss under Section 73 of the Act. Secondly, the derivative transactions were during the period from July, 2005 to September, 2005. Considering the provisions of proviso (d) to sub-section 5 of Section 43, it was held by the AO that the same were violated. They were inserted in the statute w.e.f 1-4-2006, stipulating that eligible transaction should be conducted/carried out only in recognized stock exchange to be notified. The said insertion was made by the Finance Act, 2005. Rule 6 DDA and Rule DDB were subsequently enacted to prescribe conditions and procedure for notification of a recognized stock exchange. Accordingly, the National Stock Exchange and Bombay Stock Exchange were notified vide Notification dated 25th January, 2006 and the transactions carried out by the assessee were with Nation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification is reproduced below :- [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (ii)] GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NOTIFICATION New Delhi, the 29th November, 2013 INCOME-TAX S.O.3539 (E).- In exercise of the powers conferred by clause (iii) of the Explanation 2 of clause (e) of the proviso to clause (5) of section 43 of the Income-tax Act, 1961 (43 of 1961) read with sub-rule (4) of rule 6DDD of the Income-tax Rules, 1962, the Central Government hereby notifies the Multi Commodity Exchange of India Limited, Mumbai as a recognised association for the purposes of clause (e) of the proviso to clause (5) of the said section, with effect from the date of publication of this notification in the Official Gazette. 2. The Central Government may withdraw the recognition of Multi Commodity Exchange of India Limited, Mumbai if any of the conditions specified in rule 6DDC of the Income -tax Rules, 1962, is violated. 3. This notification shall remain in force until the approval granted by the Forward Markets Commission is withdrawn or expires, or the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peculative transaction. Therefore, the exemption to the transactions given by the statute is w.e.f. 1-4-2014 and this is inserted by the Finance Act, 2013. In pursuance of the amendment, Notification No.51, dated 4-7-2013 has been issued by the CBDT, vide which Rule 6DDD is inserted in the Income Tax Rules. The said notification read as under :- INCOME-TAX (NINTH AMENDMENT) RULES, 2013 -INSERTION OF RULES 6DDC, 6DDD AND FORM NO. 3BC NOTIFICATION NO.51/2013 [F.NO.142114/2013-TPL]/ SO 2017(E), DATED 4-7-2013 In exercise of the powers conferred by clause (e) of the proviso to clause (5) of section 43 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:- 1. (1) These rules may be called the Income-tax (9th Amendment) Rules, 2013. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Income-tax Rules, 1962, in Part II, in sub-part C, after rule 6DDB, the following rules shall be inserted, namely :- 6DDC. Conditions that a recognized association is required to fulfill to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) confirmation regarding fulfilling the conditions referred to in clause (ii) to clause (v) of rule 6DDC; (iv) such other information as the recognized association may like to place before the Central Government. (3) The Central Government may call for such other information from the applicant as it deems necessary for taking a decision on the application. (4) The Central Government, after examining the information furnished by the recognized association under sub-rule (2) or sub-rule (3), shall notify the recognised1ssociation as a recognized association for the purposes of clause (e) of the proviso to clause (5) of section 43 or issue an order rejecting the application before the expiry of four months from the end of the month in which the application is received. (5) The notification referred to in sub-rule (4) shall be effective until the approval granted by the Forward Markets Commission is withdrawn or expired, or the notification is rescinded by the Central Government. 3. In the said rules, in Appendix-II, after Form No. 3BB, the following Form shall be inserted, namely:- FORM NO. 3BC [See rule 6DDC] Monthly statement to be furnished by a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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