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TMI Blog2017 (12) TMI 1349X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Infinite Infotech Park Ltd. (2017 (6) TMI 294 - ITAT KOLKATA) thus is squarely applicable in the present case and applying the same, we hold that the impugned order passed by the ld. Principal CIT under section 263 is liable to be quashed - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... our notice has been considered and held that Derivate Loss is different from Share Loss and hence same can be adjusted against other profit. In view of the above lie would request you to drop the proceedings initiated under Section 263 of the act. Conditions of s.263 are not fulfilled since there is no order which is prejudicial to the interest of revenue since there is no loss of revenue. We would further like to state as under:-In this respect your attention is drawn to the provisions of section 43(5) of the Act- 43(5) "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shores, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scraps: Provided that for the purposes of this clause- (a) a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold him, or (b) a contract in respect of stocks and shares ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 ITR (Trib) 488 (Del) "profit or loss from derivative trading will not he speculative profit or loss, therefore, the same will be eligible to be set of against the business income carried out by the assessee" RBK Securities (P) Ltd. vs. ITO 118 TTJ (Mum) 465 "Dealing in derivatives is a separate kind of transaction which does not involve any purchase and sale of shares and therefore loss on account of F&O transactions cannot be treated as speculative loss". Dy. CIT -vs.- SSKL Investors Services (P) Ltd. (2008) 113 TTJ(Mumbai) 511- "Dealing in derivatives is a separate kind of transaction which does not involve any purchase and sale of shares and therefore loss on account of F&O transactions cannot be treated as speculative loss". In view of the above facts and the position of law in particularly considering the Calcutta High Court Decision, it is prayed that the proceedings initiated under section 263 may be dropped". 5. The explanation offered by the assessee as above was not found acceptable by the ld. Principal CIT and he proceeded to revise the order of assessment passed by the Assessing Officer under section 143(3) by exercising his powers under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to produce documents & evidences which it may chose to rely upon for substantiating its own claim. Thereafter a fresh assessment order may be passed in accordance with the relevant provisions of law and in the light of the decision of the jurisdictional High Court in Asian Financial Services Ltd.-vs.CIT(2016) 70 taxmann.com 9(Calcutta). However, it is also made clear that SLP has been granted to the Revenue against the aforementioned order of High Court on 19-10-2016 in SLP No.19120 of 2016 & reported in (2016) 75 Taxmann.com 68(SC)/2016 243 Taxman 147 (SC). Hence, the AO is directed to take the status of appeal mentioned above into consideration while reframing the assessment". Aggrieved by the order of the ld. Principal CIT passed under section 263, the assessee has preferred this appeal before the Tribunal. 6. The ld. counsel for the assessee contended that even though the order of assessment passed by the Assessing Officer under section 143(3) was found to be erroneous by the ld. Principal CIT in allowing the claim of the assessee for derivative loss on merit as mentioned in the notice issued under section 263, he finally revised the order of the Assessing Officer on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer during the course of assessment proceedings and after having satisfied himself, the same was accepted by the Assessing Officer as non-speculative loss. He contended that there was thus no error in the order of assessment passed by the Assessing Officer as alleged by the ld. Principal CIT in his impugned order calling for revision under section 263. 8. The ld. D.R., on the other hand, submitted that the amount of derivative loss was not claimed by the assessee separately but the same was shown under the head "purchase/direct expenses". He submitted that the issue as to whether the derivative loss claimed by the assessee was in the nature of speculative loss or not was required to be examined by the Assessing Officer in the light of the provision of section 43(5) as well as Explanation to section 73 and since it was not done by the Assessing Officer, the order of assessment made by him was erroneous in so far as it is prejudicial to the interest of the revenue, as rightly held by the ld. Principal CIT. He contended that there is nothing on record to show that any query was specifically raised by the Assessing Officer on this issue and it was thus a case of lack of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding or observation thereon and without arriving at any conclusion to show how the order of Assessing Officer was erroneous on the issue on merit, he simply set aside the same on the ground that the claim of the assessee was accepted by the Assessing Officer without making enquiries or verification, which should have been made by him. In this regard, he relied on Explanation 2 to section 263 inserted in the Statute by the Finance Act, 2015 w.e.f. 01.04.2015. As per the said Explanation, an order passed by the Assessing Officer shall be deemed to be erroneous in so far as prejudicial to the interest of the revenue for the purpose of section 263 if, in the opinion of the ld. Principal CIT or ld. CIT, the same is passed without making enquiries or verification, which should have been made. It is observed that in the case of Sterling Biotech Ltd.-vs.- Principal CIT 9ITA No. 2750/MUM/2015 dated 29.06.2016), Mumbai Bench of this Tribunal has already considered the effect of Explanation 2 to section 263. In the said case, the contention raised on behalf of the assessee was that the ld. Principal CIT, before holding an order to be erroneous should have conducted necessary enquiries or ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would imply and mean that the ld. CIT has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide this aspect/question. 11. It is observed that the Coordinate Bench of this Tribunal has recently considered a similar issue in the case of Infinity Infotech Park Limited [58 ITR (Trib) 486]. In the said case, there was no allegation in the show-cause notice issued under section 263, like in the present case, that there was a failure on the part of the Assessing Officer to make proper and adequate enquiry before completing the assessment and the allegation was that the Assessing Officer has formed a wrong opinion or findings on merit. In reply to the notices issued under section 263, the assessee filed a written reply on January 12, 2017. On the very same day, the ld. Commissioner passed an order under section 263 setting aside the order of the Assessing Officer on the ground of lack of enquiry. In these facts and circumstances involved in the case of Infinite Infotech Park Ltd. (supra), the Coordinate Bench of this Tribunal held that the ld. CIT before exercising jurisdiction under section 263 of the Act for setting aside the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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