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TMI Blog2013 (9) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. speculation loss to be adjusted against business profit by applying section 43(5)(c) &(d) instead of section 73 read with section 73(1) of the income tax act 1961. 2. The Ld. CIT (A) has erred on the facts and circumstances of the case and in law in allowing the general provision of section 43(5) over the special or particular provision, section 73 of the income tax act 1961, which is specially applicable to company alone in respect of trading of shares. 3. The appellant craves leave to add, alter, or amend any ground of appeal raised above at the time of hearing." 2. Brief facts of the case as coming out from assessment order are that assessee was engaged in the business of trading in share futures and options. The return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the business of trading in shares, future and options. In the assessment order the Assessing Officer has treated trading in F & O as speculative in nature and the loss of the F & O trading of ₹ 1,00,45,041/- was treated as speculative loss. During the course of appellate proceedings it was claimed by the AR of the appellant that the transactions done in derivatives were not speculative transactions. In support of his contention he relied upon the provisions of section 43(5) wherein it has been stated that the transactions of futures and options derivatives trading are covered by clause (c) and (d) of section 43 (5) and such transactions if done on the recognized stock exchange would not be treated as speculative transactions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. Departmental Representative took us to explanation to section 73(1) and argued that in the case of a company where a part of business consist of sale and purchase of shares such company shall be deemed to be carrying on speculation business to the extent to which the business consist of sale and purchase of such shares. She further argued that future and option is in the nature of the shares as defined under Securities Act. Continuing her argument, she submitted that share futures are derivatives of shares only and it has no meaning without the inherent value of shares under laying such shares. Therefore, trading in share future was equal to trading in shares. She further argued that Ld. CIT (A) has deleted the addition by relying u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r attention was invited to para 8 at page 77 of paper book. In view of the above, it was argued that section 43 (5) is an overriding provision and as per the section after the amendment the losses in share futures by a person cannot be held to be speculative losses. 8. In her rejoinder, the Ld. Departmental Representative again took us to paper book page 8 and invited our attention to income of the assessee which consisted of sale of crops, dividend receipt, commission receipt etc. and again argued that the explanation to section 73 was fully applicable to the assessee. 9. We have heard the rival contentions of the parties and have gone through the material placed on record. We find that there is no dispute that assessee had incurred lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of section 2 of the securities contracts (Regulation) Act 1956 (41 of 1956) carried out in a recognized stock exchange; " 10. Clause d was inserted by Finance Act 2005 w.e.f 01.04.2006 which took out the transaction in shares derivatives out of the definition of speculative business if the transactions are carried out on a recognized stock exchange. The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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