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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 ..... ppellant 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 Rs. 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 the same is dismissed as not pressed. The only issue remains with regard to disallowance of loss of Rs. 4,82,270/- incurred by the assessee company on trading in commodity derivatives. The Assessing Officer made disallowance of loss of Rs. 4,82, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued Notification No. SO 1327(E), dated 22.05.2009, which deals with the matter. The said Notification is reproduced for ready reference. In exercise of the powers conferred by clause (ii) in the Explanation to clause (d) of the proviso to sub-section (5) of section 43 of the Income-tax Act, 1961 (43 of 1961), read with rule 6DDB of the Income-tax Rules, 1962, the Central Government hereby notifies MCX Stock Exchange Ltd. as a recognized stock exchange for the purpose of the said clause with effect from the date of publication of this notification in the Official Gazette. 2. MCX Stock Exchange Ltd. shall separately maintain data regarding all transactions registered in the system in which client codes have been allowed to be changed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e loss, the provisions of Section 73(l) would be applicable, which states that the loss in Speculation Business can be set off only against profit of another Speculation Business. In the case of the assessee, there is no other Speculative Business and therefore, the assessee would not be entitled to set off this loss against Normal Business income. The deduction of this loss is therefore denied to the assessee. The assessee is however allowed to carry forward the speculation loss to be set off in accordance with the provisions of the Act." 2.1 The matter was carried before the First Appellate Authority wherein various contentions were raised on behalf of the assessee. 3. Having considered the same, CIT(A) confirmed the order of Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4- 2006. From the combined reading of clause (d) of proviso to section 43(5), Rule 6DDA, 6DDB and Explanation (ii) to section 43(5), it would be seen that the rules which have been prescribed are only procedural in nature, as they prescribe the method as to how to apply for necessary recognition and consequent notification. Hence, these are purely procedural mechanism. When a rule or provision does not affect or empower any right or create an obligation but merely relates to procedural mechanism, then it is deemed to be retrospective unless such an inference is likely to lead to an absurdity. If the amendment is made in procedural mechanism, it will apply to all the proceedings pending or to be initiated. Once in the statute, it has been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh MCX Stock Exchange in A.Y.2007-08 was non speculated transaction; therefore, loss incurred in such transactions was to be treated as normal business loss. We find that by Finance Act, 2005 Clause (d) was inserted in proviso to sub Section (5) of Section 43 w.e.f. 1.4.2006 which provided that an eligible transaction in respect of trading in derivative referred to in clause (a) of sub Section (2) of Securities Contract (Regulation) Act, 1956 carried out in a recognized Stock Exchange shall not be deemed to be speculative transactions. Thus, from 1st April, 2006 trading in derivative carried through the recognized Stock Exchange was treated as non-speculative transactions. For the purpose of clause (d), Rule 6DDA and 6DDB of IT Rules, 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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