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TMI Blog2023 (3) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... COURT] that loss incurred on account of derivatives would be deemed business loss under proviso to section 43(5) and not speculation loss and, hence, Explanation to section 73 could not be applied and as such, loss would be allowed to be set off against income arising out of proper business because derivatives were treated differently within meaning of Explanation to section 73(4) and not at par with shares. In the case of Blue Berry Trading Co. (P.) Ltd. [ 2022 (9) TMI 76 - ITAT MUMBAI] the ITAT held that where assessee executed futures and options transactions in recognized stock exchange through SEBI registered share broker, said transactions would fall under exception provided in definition of speculative transactions in terms of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f facts of the case are that during the year under consideration, the assessee carried transactions in shares, F&O and has earned brokerage income and interest income. The assessee has shown losses of Rs. 3,74,54,163/- from Future and Options (F&O) business, income of Rs. 1,07,51,347/- from share trading and profit of Rs. 6,36,861/- from Mutual Funds. In the assessment, the Assessing Officer relied upon case of M/s. DLF Commercial Developers Pvt. Ltd. 35 taxman.com 280 (Delhi High Court) and held that the loss incurred by the assessee in trading in F&O should treated as speculation loss for the purpose of Explanation to section 73 of the Act and accordingly the Assessing Officer did not allow set off of such losses incurred by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derivatives has been conducted on the recognised stock exchange as per proviso (d) to section 43(5). The appellant has contended that the AO has invoked explanation to section 73 and relied upon the case of DLF Com. Dev Pvt. Ltd. in treating the business loss in derivative as a speculation loss. Appellant has submitted that the AO has not considered the fact that Explanation to section 73 has been amended subsequently whereby the explanation is not applicable in the case of company principal business of which is the business of trading in share and the Honourable ITAT 'F' Bench, Mumbai in the case of Fiduciary Share and Stock Pvt. Ltd. Vs. ACIT, Cir. 4(2) in ITA No.321 /MUM/2013 dated 13/05/2016 has considered the similar issue and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative transactions which are categorically excluded from being regarded as speculative business as defined under s.43(5) of the Act read with proviso (d) thereto. Identical issue arose before the Hon'ble Calcutta High Court in the case of Asian Financial Services (supra) relied upon. The Hon'ble Calcutta High Court held that once it is deemed to be a normal business loss on the basis of proviso appended to Section 43(5) of the Act, a question of applying Section 73 of the Act or the Explanation thereto for the purposes of refusing loss 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 (supra) took a distin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the issue in favour of the assessee for assessment year 2012-13 (ITA No. 770/Ahd/2016 vide order dated 31-10- 2018) and assessment year 2013-14 (ITA No. 624/Ahd/2018 vide order dated 26-06-2019) and accordingly the case of the assessee is squarely covered by the aforesaid orders. The counsel for the assessee further relied upon the Ahmedabad ITAT decision in the case of Fiduciary Shares and Stocks in ITA No. 321/Mum/2013 dated 13-05-2016 in which case the similar issue was decided in favour of the assessee. 6. We have heard the rival contentions and perused the material on record. In the case of Asian Financial Services Ltd. [2016] 70 taxmann.com 9 (Calcutta) where the assessee dealing in settlement of future and option derivatives, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Share Traders Ltd. [2018] 100 taxmann.com 42 (Ahmedabad - Trib.), the ITAT held that Loss incurred on account of derivatives would be deemed business loss under proviso to section 43(5) and not speculation loss and, hence, Explanation to section 73 could not be applicable; and such loss would be set off against income from business. In our considered view, we observe that various courts, including the ITAT in assessee's own case for assessment year 2012-13 and assessment year 2013-14 has decided the issue on identical facts in favour of the assessee. In view of the above position, we find no infirmity in the order of ld. CIT(A) so as to call for any interference. 7. In the result, the appeal of the Department is dismissed. Order pronounc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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