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TMI Blog2019 (7) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT-I vs. Intermetal Trade Ltd. [ 2006 (7) TMI 130 - MADHYA PRADESH HIGH COURT] relied upon by the ld. DR is also not applicable to the facts and circumstances of the case. Consequently, finding no illegality or perversity in the impugned order passed by the ld. CIT (A), present appeal filed by the Revenue is hereby dismissed. - ITA No.4191/Del./2012 - - - Dated:- 22-7-2019 - Shri R.K. Panda, Accountant Member And Shri Kuldip Singh, Judicial Member For the ASSESSEE : Shri G.C. Srivastava, Advocate, Shri Suvinay K. Dash, Advocate And Shri Parichay Solanki, CA For the REVENUE : Ms. Ashima Neb, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, DCIT, Circle 11 (1), New Delhi (hereinafter referred to as the assessee ) by filing the present appeal sought to set aside the impugned order dated 28.05.2012 passed by the Commissioner of Income-tax (Appeals)-XIII, New Delhi qua the assessment year 2009-10 on the grounds inter alia that :- 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to treat de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rudent businessmen will do and relied upon the decision rendered by the Hon ble High Court of Madhya Pradesh in CITI, Indore vs. Intermetal Trade Ltd. (2006) 285 ITR 536 (MP) . 6. However, on the other hand, ld. AR for the assessee to repel the arguments addressed by the ld. DR for the Revenue contended inter alia that the AO has relied upon the decisions rendered prior to the amendment made by Finance Act, 2005 w.e.f. 01.04.2006 which deals with trading in derivatives only; that section 73 Explanation 1 relied upon by the ld. DR for the Revenue does not talk of F O and relied upon the decision rendered by Hon ble Bombay High Court in CIT, City 4 vs. HSBC Securities Capital Markets India (P.) Ltd. (2012) 23 taxmann.com 377 (Bom.) and coordinate Bench of the Tribunal in case of ITO vs. M/s. Emperor International Ltd. in ITA No.2181/Del/2012 order dated 27.05.2015 . Ld. AR for the assessee also relied upon the impugned order passed by the ld. CIT (A). 7. Undisputedly, the assessee company has sold out derivative trading in shares during the year under assessment as under :- Name of scrip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, a branch of National Stock Exchange for doing F O transaction is covered under CBDT Circular No.2/2006 dated 25.01.2006. Assessee company has brought on record entire details and contract notes of transaction done in F O derivative trading before AO along with copies of ledger accounts running with the brokers to supports its contentions. 10. Ld. CIT (A) decided the issue in question in favour of the assessee by relying upon the decision rendered in Smt, Seema Jain vs. ACIT 6 ITR (Trib) 488 (Del.) wherein it is held that the trading in derivatives through a recognised stock exchange w.e.f. 01.04.2006 shall not be deemed to be speculative trading. In the instant case, National Stock Exchange was recognised as stock exchange by virtue of the CBDT Circular No.2/2006 dated 25.01.2006. Similarly, in case cited as G.K. Anand Bros. Buildwell (P.) Ltd. vs. ITO (2009) 34 SOT 439 (Delhi) , the issue in controversy has been decided in favour of the assessee by returning following findings:- Section 43 (5) defines speculative transaction which means a transaction in which a contract for 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 ..... oss in speculation business. 11. In the case of R.B.K. Securities (P.) Ltd. vs. ITO 118 TTJ (Mum.) 465 , coordinate Bench of the Tribunal also held that dealing in derivatives is a separate kind of transaction which does not involve purchase and sale of shares and as such loss on account of derivative trading cannot be treated as speculative loss to the assessee. 12. In case of Gajendra Kumar T. Agarwal vs. ITO (2011) 11 taxmann.com 231 (Mum.) , coordinate Bench of the Tribunal also decided the identical issue in favour of the assessee by returning the following findings :- Section 43(5), read with sections 72 and 73, of the Income-tax Act, 1961 Speculative transactions Assessment year 2006-07 Whether profits and gains of business, for purpose of carry forward and set off of losses, as classified in two baskets (i) speculation business and (ii) non-speculation business Held, yes Whether two categories are mutually exclusive and losses incurred of each category can only be set off against profits of same category Held, yes Whether only purpose of segregating losses of speculation and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted fact that the assessee was engaged in the business of dealing in shares securities and have incurred loss from dealing in derivatives (shares futures). It is not the case of the AO that the share futures in which the assessee was dealing were not recorded in recognized Stock Exchange, the loss incurred by the assessee was also not disputed by the AO. We, therefore, by keeping in view the provisions contained in clause (d) to Subsection (5) of Section 43 of the Act, are of the view that the ld. CIT(A) was fully justified in directing the AO for not treating the loss incurred by the assessee on derivatives and the profit earned if trading of the commodity as speculative in nature, For the aforesaid view, we are also fortified by the decision of the ITAT Mumbai B Bench in the case of R.B.K. Securities (P) Ltd. Vs ITO reported in 118 TTJ 465 (supra). 14. Aforesaid decisions have been duly discussed by the ld. CIT (A) in impugned order which are applicable to the facts and circumstances of the case. The only difference between the order passed by the AO and the impugned order passed by the ld. CIT (A) is, AO has ignored the amendment vide which clause (d) h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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