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TMI Blog2011 (1) TMI 1519X X X X Extracts X X X X X X X X Extracts X X X X ..... action under the F O contract are not speculative transaction as defined in section 43(5) of the Act. 2. For that and in the facts and circumstances of the case, the Learned CIT(A) has erred in confirming the Order of the Assessing Officer for disallowance of the loss incurred by the appellant under the F O transaction inasmuch as the C.B.D.T. Circular cannot supersede the well defined provisions of the Act and the clause (d) added in the proviso to Section 43(5) is merely clarificatory in nature. 3. For that and in the facts and circumstances of the case, the Learned CIT(A) has erred in confirming the levy of interest U/S 234B of the Act inasmuch as the appellant denies its liability for any interest imposable U/S 234B of the Act as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as business loss. 3.1 The AO further charged interest under section 234B of the I.T. Act. 4. On appeal, the Ld. CIT(A) has confirmed the same by observing, regarding issue no.1, that I have perused the assessment order and considered the submissions of the appellant. It is an admitted fact that the appellant has incurred losses of ₹ 3,58,04,606/- in F O trading. Prior to insertion of clause (d) to the proviso of section 43(5) by the Finance Act, 2005 with effect from 01-04-2006, the loss incurred in F O transactions was treated as speculative loss and not business loss. Consequent to introduction of clause (d), a Notification No.2 of 2006 dated 25-01-2006 was issued wherein the National Stock Exchange, Mumbai and the Bombay St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Act, the Ld. CIT(A) confirmed the same by observing that charging of interest under section 234B is mandatory. The interest under section 234B has been clearly quantified in the notice of demand accompanying the assessment order. 5. Aggrieved by this, the Assessee is in appeal before us. 6. At the time of hearing before us, the Ld. Counsel, appearing on behalf of the Assessee, has reiterated the submissions made before the revenue authorities and further contended that in the similar set of facts, the ITAT, Mumbai J Bench in the case of Prem Associates Advertising Marketing in ITA No.6547/Mum/2009 held that the derivate transactions, entered into by the assessee at the recognized Stock Exchanges even prior to the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 transactions, the stock exchange was not notified for the purposes of Section 43(5)(d), and, therefore, even though clause (d) came into force with effect from 1t April 2006, the impugned transactions did not satisfy the requirements of Section 43(5)(d) to the effect that transactions should be entered into in a recognized stock exchange. Section 43 (5) defines Speculative transaction means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, by decision of the coordinate bench in the case of Anand Brothers (supra) and by Hon ble Gujarat High Court s judgment in the case of Claris Lifesciences (supra). 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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