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TMI Blog2010 (9) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... roval 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, Respectfully following these decisions, we uphold the grievance of the assessee and hold that the derivate transactions, entered into by the assessee at the recognized stock exchanges even prior to the date of notification in the relevant previous year, are to be treated as covered by the exclusion clause set out in Section 43(5)(d). The assessee gets the relief accordingly. Disallowance of club entrance fees - HELD THAT:- we are inclined to uphold the grievance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered by the said provision, and, accordingly, excluded from the definition of 'speculative transaction' under the Income Tax Act, 1961. This issue is raised by the assessee by way of grounds of appeal no. 1to 3. 3. The material facts are not in dispute. The assessment year involved is 2006-07, and the assessee has incurred loss of ₹ 18,05,525, in respect of 'future and options' transactions incurred on the National Stock Exchange of India on 17th, 23rd and 24th January 2006, which was claimed to be a normal business loss in view of the exception carved out by insertion of clause (d) of Section 43(5) brought to statute w.e.f 1st April 2006. This claim has been rejected by the authorities below on the ground that, as on the date of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also affect the transactions entered into in the related stock exchange prior to the date of recognition. 4. Learned counsel's contention is that once the stock exchanges have been notified, though on 25th January 2006, all the transactions entered into in the stock exchanges so notified, even prior to the date of notification, should be treated as having been entered into in the recognized stock exchanges. In support of this plea, learned counsel has relied upon the decision of Delhi B bench in the case of GK Anand Brothers Buildwell (Pvt) Ltd Vs ITO (34 SOT 439 5. Learned counsel has also filed copies of decision of another coordinate bench in the case of Claris Lifesciences Ltd Vs ACIT ( 112 ITD 307), also of Hon'ble Gujrat High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge has to be notified by the Central Board of Direct Taxes for the purposes of Section 43(5)(d). The notification issued in exercise of the powers so vested with the CBDT specifically provides that the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance against disal lowance of club entrance fees of ₹ 1,10,241. 10. During the assessment proceedings, the Assessing Of f icer noted that the assessee had claimed a deduction of ₹ 1,10,241 paid to Gymkhana Club Ltd towards membership of one of the partners in the assessee f irm. Whi le the Assessing Of f icer did not question business expediency of this payment , the assessee disal lowed the same on the ground that it is a capital expenditure. The line of reasoning adopted by the Assessing Of f icer was that the amount paid by the assessee for entrance fees resulted in an enduring benef it to the assessee, and could not be al lowed as a revenue deduction. It was also reasoned that 'the mere fact that the participation of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Representative, on the other hand, submits that the assessee before us is a partnership concern and there is no material on record to suggest that the assessee derived any commercial advantage from the club membership. It is further submitted that , in any event , entrance fees is capital expenditure giving enduring benef it to the assessee, it is not admissible as revenue deduction. We are thus urged to conf irm the disal lowance. 12. Having given our careful consideration to the rival contentions, we are inclined to uphold the grievance of the assessee. We have noted that the limi ted issue before us is whether the club membership fees is capital expendi ture or revenue expenditure. This issue is covered in favour of the assessee by H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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