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TMI Blog2019 (6) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. CIT(Appeals). We, therefore, do not entertain this issue now and dismiss Ground No. 2 of the assessee's appeal. 4. The issue involved in Ground No. 3 relates to the disallowance of Rs. 39,10,971/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of assessee's claim for set off of loss arising from derivative transactions in commodity future and options against business income by treating the same as speculative loss. 5. The assessee in the present case is an individual, who filed his return of income for the year under consideration on 30.07.2013 declaring total income of Rs. 7,97,120/-. In the said return, loss on Future Trading of Rs. 39,10,971/- on account of commodity future and options was set off by the assessee against profit from non-speculative business. In this regard, it was explained by the assessee before the Assessing Officer during the course of assessment proceedings that in terms of section 43(5) of the Act and the relevant Circular, if the transaction of Future Trading is done through recognized stock exchange, the income from dealing in shares/commodities through derivatives, i.e. Futures and Options is not to be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), the following submissions were made on behalf of the assessee in support of his case on this issue:- "During the year the appellant incurred loss of Rs. 39,10,971/- in transaction of commodity future and adjusted the loss with the profit earned in commission business. But the Id assessing officer disallowed the adjustment of loss from trading of commodity future with the profit of commission business stating that the loss on trading of commodity future being speculative loss and hence cannot be set-off against the profit of commission business. The appellant submits that the appellant is engaged in the business of share and commodity trading besides the business of earning commission. During the year the appellant made some transaction in commodity futures through recognized stock exchange and incurred loss of Rs. 39,10,971/-. In this respect your kind attention is drawn to the provisions of section 43(5) of the IT Act 1961 which is as under:- Sec 43(5) "speculative transaction" means a transaction in which a contract or the purchase or sale of any commodity, including stocks and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that in the present case the appellant made transaction of future trading i.e. transaction made in commodity derivatives in future and options through recognized stock exchange and incurred a loss of Rs. 39,10,971/- during the year. Hence, the loss incurred by the appellant shall be considered as business loss and not as speculation loss". Reliance was also placed by the assessee on the following judicial pronouncements:- (i) G.K. Anand Bros. Buildwell (P) Ltd. -vs.-ITO[34 SOT 439]; (ii) Seema Jain -vs.- ACIT [6 ITR (Trib.) 488 (Del.)]; (iii) RBK Securities Pvt. Limited -vs.- ITO [118 TTJ (Mum) 465]; (iv) DCIT -vs.- SSKI Investors Services Pvt. Ltd. [113 TTJ (Mum) 511]. 7. The ld. CIT(Appeals) did not find merit in the submissions made on behalf of the assessee on this issue and proceeded to confirm the action of the Assessing Officer in treating the loss from derivative transactions in Commodity Futures and Options as speculative loss for the following reasons given in his impugned order:- "I have perused the observation of the AO and the argument of the appellant. In this regard it is pertinent to point out that there are some fundamental differences between commod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve loss. Keeping in view of the aforesaid fact it is clear that the income from share earned by the appellant during the year under the category of non speculative transactions whereas derivative income is still under the category of speculative business in nature which can be set off against only speculative income. Therefore, the addition made by the AO is here by upheld and the ground of appeal is dismissed". 8. We have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld. D.R. has strongly relied on the orders of the authorities below in support of the revenue's case on this issue, it is observed that similar issue has been decided in favour of the assessee by the Mumbai Bench of this Tribunal in the case of ACIT -vs.- Arnov Akshay Mehta [53 SOT 581] cited by the ld. Counsel for the assessee vide paragraphs no. 8 & 9 of its order, which read as under:- "8. We have carefully considered the rival contentions of the parties, perused the findings of the Commissioner (Appeals) as well as of the Assessing Officer and the material available on record. The assessee who is carrying out derivative trading in commodity thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s speculation transaction, then simply because procedural mechanism has taken a long time to recognize the Stock Exchange, it will not lead to an inference that the same would be applicable from the date when the Stock Exchange has been recognized by the Central Govt. The notification issued under Rule 6DDB, does not empower any right or create obligation but only recognizes what is already provided in statute. Thus, the transactions carried out through MCX Stock Exchange after 1st April 2006, would be eligible for being treated as non-speculation within the meaning of clause (d) of proviso to section 43(5). Various case laws, as have been relied upon by the learned Counsel also, support this view that recognition by the Central Govt. of the Stock Exchange from a later date will not debar the transaction as non-speculation, especially after 1st April 2006. Therefore, in our opinion, the assessee's derivative trading through MCX Stock Exchange in the assessment year 2007-08 is non-speculation transaction and, therefore, the loss incurred in such transactions is to be treated as normal business loss and, accordingly, the findings of the Commissioner (Appeals), to this extent, is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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