9911796707
TMI Blog2013 (5) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain . Your appellant submits that under the facts and in the circumstances of your appellant s case the CIT(A) ought to have held that the income from de3rivatives is taxable as short term capital gains . 2. Your appellant craves leaves to addto, alter, amend or vary all or any of the aforesaid ground of appeal as they/their representative may deem fit. 3. Briefly stated relevant facts of the case are that the assessee is a Director of M/s G.R. Engineering Works Ltd. and is also engaged in dealing with the derivatives transactions. During the year, on account of derivatives transactions, assessee offered profits amounting to ₹ 5,98,411/- and offered the same as short term capital gain . In support of such claim, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness income of the assessee . 4. Aggrieved with the above conclusions of the AO, assessee filed the appeal before the CIT(A). During the proceedings before him, the assessee submitted that the claim of the assessee for treating the said income as capital gains is proper and it does not call for any changes. Further, he mentioned that derivatives in principle always does not involve delivery-based transactions. Therefore, AO s logic is patently erroneous. However, the CIT(A) considered the above submissions and finally upheld the AO s conclusions and rejected the arguments of the assessee. In para-5 of his order, CIT(A) mentioned that any profit arising out of any non-delivery based transactions involving derivatives constitutes non specu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO has relied mainly on Section 43(5) of the I.T. Act, wherein it has clearly been held that non-delivery of shares would term a transaction as a speculative transaction and as the appellant has herself stated that there has been no delivery of securities, it would mean that this transaction was speculative in nature and therefore, no falling under the head Capital Gains at all. However, the provision (d) of Section 43(5) which has been inserted by the Finance Act, 2005 with effect from 1/4/2005 clearly states that the transaction in respect of trading in derivatives is not a speculative transaction. Under the circumstances, as there is no delivery of shares and as the transaction does not form a part of the speculative transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual delivery of goods manufactured by him or merchandise sold by him; or (b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations. Or (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; (or) (d) an eligible transaction in respect of trading in derivatives referred to in clause ((ac)) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognized stock exchange;) shall not be d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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