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2020 (5) TMI 436 - AT - Income TaxDisallowance of business loss being the amount of unrecoverable balances of brokers - non- recovery of the advances given to the brokers - HELD THAT:- AO for the instant year held that the assessee is dealing in speculative transactions and invoked provisions Section 43 (5) - AO has also held that the assessee has been carrying trade in commodity derivatives. Section 43 (5)(e) considers an eligible transaction in respect of trading in commodity derivatives carried out in a recognized association shall not be deemed to be a speculative transaction. We hold that the transactions of the assessee shall not be deemed to be speculative transactions. Chapter VII of the Finance Act, 2013 w.e.f. 01 .04 .2014, details as to what is a commodity derivative in the Commodities Transaction Tax (CTT). As per the CTT commodity derivative means a contract for delivery of goods which is not a ready delivery contract or a contract for differences which derives its value from the prices of such underlying goods. We find that the assessee is in the business of commodity derivatives but not in the speculation transaction as held by the AO. The revenue has also accepted the income from the transactions of the assessee as business income but not as income from speculation for all the earlier years.) - Owing to collapse of the NSEL, no further trading could be conducted by the assessee in the latter years). It is also an undisputed fact that the trade advances given by the assessee stands irrecoverable. A tax history of the assessee , treatment given by the revenue to the transactions undertaken by the assessee, finding of the AO that the assessee is into commodity derivatives, provisions of the Section 43 (5) invoked by the AO, provisions of Section 43 (5)(e) relied upon by the ld. AR, Explanation (2) of Section 43 as to what constitutes commodity derivatives, Para 5 of Chapter VII of Finance Act, 2013, CBDT Circular No. 3/2006 dated 27.02.2006, orders of Megh Sakariya International [2018 (9) TMI 1961 - ITAT CHENNAI], Omni Lens Pvt. Ltd. [2018 (10) TMI 1426 - ITAT AHMEDABAD] and case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] we hereby hold that the business loss claimed by the assessee is allowable u/s 28 of the Act. - Appeal of the assessee is allowed
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