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2013 (10) TMI 643 - ITAT MUMBAIJobbing Activity - Whether jobbing activity is non-speculative or not – Held that:- The law does not provide an exception, in terms of section 43(5)(c), to a member of a forward market or a stock exchange qua non-delivery based transactions for being non-speculative - It is therefore incumbent on such member, to avail the said exception, show that the relevant jobbing or arbitrage transaction was entered into to guard against the loss to which he was otherwise subject, i.e., on account of the transactions entered into in the ordinary course of his business - To put succinctly, the field is not clear, but qualified by the condition of the purpose for which the said hedging transaction/s stands entered into. The jobbing activity forms an integral part of his business - This becomes all the more relevant and pertinent in the present case, as apart from being only toward satisfaction of the mandate of the provision, the loss claimed stands incurred in the jobbing activity itself, i.e., which the law excepts where entered into to guard against an imminent or possible loss that a member stands to incur or suffer in the course of his business - no loss could be incurred on such transactions, which may be so, but only to emphasize that a jobbing transaction could be entered into by a member even independent of and de hors the purpose of safeguarding self against losses that one is susceptible or prone to in the ordinary course of one's business, and in which case it would be speculative - Further, where and to the extent the assessee is unable to establish its jobbing activity as falling within the purview of s. 43(5)(c), the same, whether finally resulting in a profit or loss, being speculative by definition, would qualify as a separate and distinct business activity in terms of Explanation 2 to section 28 of the Act. It would be fit and proper that the matter is restored back to the file of the A.O. to enable the assessee an opportunity to present its case of the jobbing transactions, on which the impugned loss stands sustained by it, as non-speculative in terms of sec. 43(5)(c), and decide the same as per law by issuing definite findings of fact, having regard to the observations made in this order – Decided partly in favour of Assessee.
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