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TMI Blog2020 (7) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... o substantial question of law to be arising in the present case at this stage, requiring our consideration or pronouncement on the merits of the case, since the matter has only been remanded to the Assessing Authority. - T.C.A. No. 818 of 2016 - - - Dated:- 23-7-2020 - Dr. Justice Vineet Kothari And Mr. Justice Krishnan Ramasamy For the Appellant : Mr.G.Baskar For the Respondent : Mr.T.Ravikumar, Senior Standing Counsel ORDER DR.VINEET KOTHARI, J. The Court was held by Video Conference, as per the Resolution of the Full Court dated 3 July 2020, by Judges at their respective residences and the counsel, staff of the Court appearing from their respective residences. 2. The present Appeal has been filed by the Assessee M/s.Capricorn Food Products India Limited raising the following purported substantial questions of law calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, 'B' Bench, Chennai, dated 27.5.2016 in I.T.A.No.2179/Mds/2015, for the Assessment Year 2008-2009:- (i) Whether the order of the Tribunal is sustainable in law as it suffers from serious inconsistencies and illegalities? (ii) W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising out of speculative transaction could only have been set off against profits arising out of speculative transaction. In the present case, the assessee, as already indicated, has been dealing in shares where delivery was in fact taken and also in shares where delivery was not ultimately taken. In other words, the assessee has been dealing in actual selling and buying of shares as also dealing in shares only for the purpose of settling the transaction otherwise than by actual delivery. The question arise whether the losses arising out of the dealings and transaction in which the assessee did not ultimately take delivery of the shares or give delivery of the shares could be set off against the income arising out of the dealings and transactions in actual buying and selling of shares. An answer to this question is to be found in the explanation appended to Section 73 which reads as follows: 'Explanation: where any part of the business of a company other than a company whose gross total income consists mainly of income which is chargeable under the heads interest on securities , or a company the principal business of which is the business of banking or the grantin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITD 203, has held as under: Total sales during the year amounted to 27.78 crores, that The AO and the FAA had held such transaction were speculative in nature and had disallowed the claim made by the assessee, that the assessee was of the opinion that transactions entered into by it were not speculative transactions. ITAT found that the amount involved in the forward contract(FC) was more than 100% of the turnover of the assessee, that FC were not relatable to specific bills, that the assessee had not related any single bill to any of the contract and had not provided any purchase order during the assessment or appellate proceedings. ITAT found that in the case under consideration assessee was not dealing in Foreign Exchange, therefore transactions entered into by it in Foreign Exchange cannot be held to be hedging transactions. As the assessee was dealing in diamonds and FC entered into only for diamonds would have been covered by the proviso (a) to the section 43(5)of the Act. As held by the Hon'ble High Court of Calcutta in the matter of Gourepore Co. Ltd, onus was on the assessee to prove that the transactions in question were not of a speculative nature. ITAT was of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh consideration. 7. Before us, the ld. Representative relied on the judgment of Gujarat High Court in CIT vs Friends and Friends Shipping P. Ltd, [2013J 217 Taxman 267, for the proposition that if the assessee failed to take delivery within the period indicated in contract and the assessee had given instructions to bank for cancellation of contract on payment of agreed charges to the bank these transactions cannot be considered as speculative transaction. However, there is no finding in this judgment towards this effect and the reliance placed by the assessee is misplaced. More so, this issue was considered by the Mumbai Tribunal while delivering the decision in the case of Araska Diamond P. Ltd, 152 lTD 203, and after following the judgments of Calcutta High Court in the case of Bengal Assam Co. Ltd vs CIT 227 CTR 399, and Bombay High Court judgment in the case of CIT vs Badridas Gauridu P. Ltd 261 ITR 256, the Tribunal came to the conclusion that the transactions, which were prematurely cancelled, cannot be considered as business transaction and it is to be considered as speculative transaction. In view of the above, we are inclined to remit the issue back to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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