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2021 (7) TMI 1192 - AT - Income TaxLosses in derivative segment and claim the set-off of the same as normal business loss - Set off of losses incurred in the trading activity on account of derivative segment (futures and options) against the business income during the year without appreciating the fact that AO has rightly treated the losses as speculative loss and not allowed to set off by invoking the provisions of Section 73(1) - HELD THAT:- After considering the ratio of decision of Hon’ble Apex Court in Snowtex Investment Ltd.[2019 (5) TMI 1165 - SUPREME COURT] that the provisions of Sec.43(5) were amended by Finance Act, 2005. Prior to the amendment, Section 43(5) defined a 'speculative transaction' to mean a transaction in which a contract for the purchase or the sale of any commodity including stocks and shares is settled otherwise than by the actual delivery or transfer of the commodity or scrips. The impact of the amendment by the Finance Act, 2005 was that an eligible transaction on a recognised stock exchange in respect of trading in derivatives was deemed not to be a speculative transaction. With effect from 01/042006, by deeming fiction, trading in derivatives was not to be regarded as speculative transaction when it was carried out on a recognized stock exchange. CBDT Circular dated 27/02/2006 indicated that this amendment was occasioned by the changes which were introduced by SEBI both at the legal and technological level for bringing in greater transparency in the market for derivatives We are of the considered opinion that Ld. CIT(A) has clinched the issue in the correct perspective. The losses arising to the assessee in derivative segment are not to be considered as speculative in nature by virtue of clause (d) to sub-section (5) of Sec.43. The same are to be treated as normal business losses. This being so, the set-off of the same would be allowed in accordance with the law. Ground No.1 of the appeal stand dismissed. Earned profit in trading activity in cash segment and speculation income - There are no losses under both the segments. The ground raised by the revenue is misplaced.
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