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2020 (6) TMI 467 - AT - Income TaxRevision u/s 263 - speculative loss in view of Section 43(5) - Treatment to currency derivative transactions - HELD THAT:- MCX Stock exchange Ltd is a recognized stock exchange and M/s Godavari Exim Pvt Ltd was a member of MCX Stock exchange Ltd; therefore assessee`s currency derivative transactions are covered by exception clause (d) of section 43(5) of the Act, hence loss incurred by the assessee to the tune in respect of currency derivative is not speculation loss, therefore order passed by the AO u/s 143(3) dated 02.11.2016 is not erroneous. PCIT, on perusal of contract notes, deputed an Inspector to verify the transactions with the broker i.e. M/s Godavari Exim Pvt Ltd. The Inspector found the office and stated that an employee of Om Transport Co. stated that Godavari Exim Pvt Ltd and Om Transport were running under the sign board on Om Transport Co. The said employee of Om Transport Co. affirmed that Godavari Exim Pvt Ltd is a Transport Company. As submitted that after passing the order u/s 263 he had made enquiries with the stock exchange and found out that said M/sGodavari Exim Pvt Ltd had surrendered its membership of MCX Stock Exchange and after surrendering the same, it was engaged in Transport business. We note that transactions were duly backed by contract notes, transactions were entered into by account payee cheque. The assessee proved that MCA Stock Exchange Ltd was notified for the purpose of section 43(5) of the Act, vide Notification No. 46/2009 dated 22.05.2009 issued by the CBDT and the currency derivative transaction was done by assessee through broker i.e M/s Godavari Exim Pvt Ltd; who was member of MCA Stock Exchange Ltd. The assessee`s transaction falls under clause (d) of sub-section 5 of section 43 of the Act and therefore currency derivative loss is not a speculation loss. Based on the factual position, as narrated above, the assessment order,u/s 143(3) of the Act dated 02.11.2016 which is subjected to impugned revision proceedings, thus could not be held to be erroneous and prejudicial to the interest of the revenue. Accordingly, we quash the impugned revision proceedings, and set aside learned Commissioner's order in challenge before us.- Appeal of the assessee is allowed.
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