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2018 (4) TMI 802 - HC - Income TaxLoss in open market trading - speculative loss or not - set off the loss against the normal business income - denial on the ground that the assessee failed to prove that transactions were done through a recognised stock exchange viz., MCX stock exchange and was not supported by proper time stamped contract notes and that the transaction did not qualify as an eligible transaction - losses in speculation business - Held that:- The transaction done by the assessee is not a speculative transaction but it only comes under provios (d) to Section 43(5) thereby it is only a non speculative transaction and thus exempt from tax. Section 73 of the I.T. Act deals with "losses in speculation business". Explanation to Section 73 categorically states that in the case of a company, business of purchase and sale of shares is deemed to be speculative business. In the instant case, the assessee had suffered loss in trading of derivatives carried through Multi Commodity Stock Exchange. As derivative transactions being separate from trading in shares, provisions of Explanation to Section 73 will not be applicable to such transactions and hence, the loss incurred by the assessee in derivative transactions through recognised stock exchange has to be set off against other business income as per provisions of the Act. The transaction carried out by the assessee is a non speculative transaction and thus Section 43(5) is not attracted to the facts of the instant case and likewise the assessee was trading in derivatives and not in shares, so the loss suffered by the assessee in trading in derivatives is excluded from the ambit of Explanation to Section 73 - We concur with the decision taken by the Appellate Tribunal as well as the Commissioner of Income Tax (Appeals) in rejecting the view taken by the Assessing Officer to add ₹ 60,66,466/- as loss, on open market trading to the income of the assessee. - Decided against revenue
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