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TMI Blog2018 (11) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... ss to be set off against business income is wholly incorrect. The Hon’ble Calcutta High Court after taking note of the decision of Hon’ble Delhi High Court in DLF Commercial (2013 (7) TMI 334 - DELHI HIGH COURT) took a distinct stand that derivatives cannot be treated at par with shares for the purposes of Explanation to Section 73 because the legislature has treated it differently. Thus, in view of the aforesaid position enunciated by the Hon’ble High Court in Asian Financial Services (2016 (3) TMI 685 - CALCUTTA HIGH COURT), we find good deal of force in the case of assessee. The claim of the assessee thus requires to be allowed on this ground alone. Disallowance u/s 14A - AO has disallowed an estimated expenses pegged at ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( CIT(A) in short), dated 07.12.2015 arising in the assessment order dated 31.12.2014 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning assessment year 2012-13. 2. In the captioned appeal, the assessee has filed following concise/modified grounds of appeal for adjudication purposes: 1. Ld. CIT(A) erred in law and on facts in confirming action of AO to treat business loss of ₹ 5,19,80,774/- as speculation loss by applying explanation to section 73 of the Act. Ld. CIT(A) ought to have considered submission of the appellant and ought to have treated business loss instead of treating same as speculation loss. It be so held now. 2. Ld. CIT(A) erred in confirming action of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thus not allowed to be set off against other streams of income reported in the return of income except income arising in cash segment of speculative nature. For doing so, the AO relied upon the decision of the Hon ble Delhi High Court in the case of CIT vs. DLF Commercial Developers Pvt. Ltd. 35 taxmann.com 280 (Del). 4. Aggrieved, the assessee preferred the appeal before the CIT(A). 5. The CIT(A) re-visited the various submissions made on behalf of the assessee but, however, found no merit therein. The CIT(A) observed that the provisions of Section 43(5) of the Act which provides definition of speculative transaction applies only for the purposes of Section 28 of the Act and does not extend to other sections of the Act. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Elaborating further, it was submitted that in view of the exclusion made in sub-clause (d) to Section 43(5) of the Act which defines the expression speculative transaction , loss arising from derivative transactions are concerned, the trading in derivatives cannot be deemed to be speculative transaction at the first instance. Continuing further, the learned senior counsel for the assessee raised three broad legal contentions to prop up its case. 7.1 Firstly, Explanation to Section 73 of the Act cannot apply to loss in F O activity which are expressly excluded from being regarded as speculative business under s.43(5)(d) of the Act. For this proposition, the learned senior counsel relied upon the decision in the case of Asian Financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel accordingly submitted the impugned action of the Revenue thus requires to be set aside and claim of the assessee requires to be allowed. 8. The learned DR, on the other hand, relied upon the order of the lower authorities. 9. We have carefully considered the rival submissions and perused the respective orders of the AO and CIT(A). The substantive question that arises for adjudication is whether loss incurred in eligible transactions i.e. derivative transactions within the meaning of Proviso (d) to Section 43(5) of the Act not involving any purchase or sale of shares per se can be regarded as speculative loss for the purposes of set off in view of Explanation to Section 73 or not. The controversy involved in the present case i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid position enunciated by the Hon ble High Court in Asian Financial Services (supra), we find good deal of force in the case of assessee. The claim of the assessee thus requires to be allowed on this ground alone. 9.3 In view of the resounding conclusion drawn in favour of the assessee on the aforesaid legal position, we do not consider it necessary to advert to other alternative contentions raised on behalf of the assessee. 10. In the result, Ground No.1 of the assessee s appeal is allowed. 11. Ground Nos. 2 3 concern disallowance under s.14A of the Act. The AO has disallowed an estimated expenses pegged at ₹ 5,09,728/- as attributable to exempt income by invoking Section 14A of the Act. The aforesaid action ..... X X X X Extracts X X X X X X X X Extracts X X X X
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