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TMI Blog2015 (8) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... n commodity derivatives. - Decided in favour of assessee. - ITA.No.2392/Ahd/2011 - - - Dated:- 9-1-2015 - SHRI SHAILENDRA KUMAR YADAV AND SHRI ANIL CHATURVEDI , JJ. For the Appellant : Shri Dinesh Singh ,D.R. For the Respondent : Shri Hiren J. Trivedi , AR ORDER PER SHAILENDRA KUMAR YADAV, J.M: This appeal has been filed by the Assessee against the order of Commissioner of Income Tax (Appeals)-XIV, Ahmedabad, dated 04.08.2011 for A.Y.2008-09 on the following grounds: On the facts and in the circumstances of the appellant's case, the learned CIT(A) has erred in confirming disallowance of expenditure of ₹ 1,31,37,264 incurred by the appellant company in connection with Public Issue. On the facts and in the circumstances of the appellant's case, the learned CIT(A) has erred in confirming disallowance of loss of ₹ 4,82,270 incurred by the appellant company on trading in commodity derivatives. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or at the time of hearing of the appeal. 2. At the outset of hearing, learned AR does not want to press Ground No.1. Hence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... data regarding all transactions registered in the system in which client codes have been allowed to be changed for periodical inspection by the Director-General of Income-tax (Investigation) having exchange and provide copies of the relevant information as and when required. 3. The Central Government may withdraw the recognition granted to MCX Stock Exchange Ltd. if any of the conditions specified in rule 6DDA of the Income-tax Rules, 1962, subject to which the recognition is granted, is violated. 4. This notification shall remain in force until the approval granted by the Securities and Exchange Board of India is withdrawn or expires, or this notification is rescinded by the Central Government as provided in sub-rule(5) of rule 6DDB of the Income-tax Rules, 1962 - Notification No. SO 1327(E), dated 22-5-2009. The provision and the mandate of the Act read with the above referred Notification that although the transaction in commodity derivative is a speculation transaction, it is deemed not to be so by virtue of the clause (d) of the Proviso to section 43. However the Notification is applicable only from 22-05- 2009 and not before it. Therefore the transaction in commodit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l with a view to guard against losses due to price fluctuations. It is claimed by the appellant that the transaction in commodity futures are in the nature of hedging transactions to safeguard against the price fluctuations of the raw material. The claim of the appellant is not supported by any evidence. During the course of appellate proceedings, the appellant was asked to furnish the evidence to prove that the transactions were in the nature of hedging transaction. However, the appellant has not furnished any evidence in this respect. For claiming that the transaction was a hedging transaction, the appellant has to prove that both the transactions of actual purchase and the transactions in the future markets have been done simultaneously and a nexus in the two transaction has to be demonstrated and established by the appellant. The appellant has failed to do so, and therefore, the claim of the appellant that these are hedging transactions is not accepted. Therefore the loss of R.4,82,270/- incurred by the appellant company on trading of commodity derivatives is held to be not allowable as per clause (a) of Section 43(5) also and the ground of appeal is, therefore, dismissed. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable from the date when the Stock Exchange has been recognized by the Central Govt. The notification issued under Rule 6DDB, does not empower any right or create obligation but only recognizes -what is already provided in statute. Thus, the transactions carried out through MCX Stock Exchange after 1-4-2006, would be eligible for being treated as non-speculative within the meaning of clause (d) of proviso to section 43(5). Various case laws, as have been relied upon by the assessee also support this view that recognition by the Central Govt. of the Stock Exchange from a later date will not debar the transaction as non-speculative, especially after 1-4-2006. Therefore, it was to be opined that the assessee's derivative trading through MCX Stock Exchange in the assessment year 2007-08 was non-speculative transaction and, therefore, the loss incurred in such transactions was to be treated as normal business loss and, accordingly, the findings of the Commissioner (Appeals), to this extent, were to be upheld. Accordingly, the ground raised by the revenue was to be dismissed. [Para 9]. 5. In view of the above, we are of the view that assessee s derivative trading through MC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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