Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (7) TMI 936 - AT - Income TaxAddition treating business loss as speculative loss in respect of loss on account of forex derivative contracts (Exotic Cross Currency Option Contracts) - Held that:- Explanation to sec.73 creates a deeming fiction by which among the assessee, who is a company, as indicated in the said Explanation dealing with the transaction of share and suffer loss, such loss should be treated to be speculative transaction within the meaning of sec.73 of the Act, notwithstanding the fact that the definition of speculative transaction mentioned in sec.43(5) of the Act, the transaction is not of that nature as there has been actual delivery of the scrips of share. As per the definition of sec.43(5), trading of shares which is done by taking delivery does not come under the purview of the said section. Similarly, as per clause (d) of sec.43(5), derivative transaction in shares is also not speculation transaction as defined in the said section. Therefore, both profit/loss from all the share delivery transactions and derivative transactions are having the same meaning, so far as sec.43(5) of the Act is concerned. Again, in view of the fact that both delivery transactions and derivative transactions are non-speculative as far as sec.43(5) is concerned, it follows that both will have the same treatment as far as application of Explanation to sec.73 is concerned. Therefore, aggregation of the share trading profit and loss from derivative transactions should be done before the Explanation to sec.73 is applied. Both trading of shares and derivative transactions are not coming under the purview of Section 43(5) of the Act which provides definition of “speculative transaction” exclusively for purposes of section 28 to 41 of the Act. Again, the fact that both delivery based transaction in shares and derivative transactions are non-speculative as far as section 43(5) is concerned goes to confirm that both will have same treatment as regards application of the Explanation to Section 73 is concerned, which creates a deeming fiction. From the above decision of the Calcutta High Court in the case of Baljit Securities Pvt. Ltd. cited [2014 (6) TMI 475 - CALCUTTA HIGH COURT] the issue stands covered in favour of the assessee. However, we make it clear that total transaction considered for determining this business loss from derivative transactions cannot be more than the total export turnover of the assessee for the assessment year under consideration and if the derivative transaction is in excess of export turnover, then that loss suffered in respect of that portion of excess transactions to be considered as speculative loss only as that excess derivative transaction has no proximity with export turnover and the Assessing Officer is directed to compute accordingly. This ground is allowed as indicated above. - Decided in favour of assessee. Treating the capital of the firm introduced by the partner by cash as unexplained income u/s.68 - Held that:- If any capital is introduced by the partner, the assessee shall prove the identity of the partner, genuineness of the transaction and credit worthiness of the partner. In the present case, if the partner confirmed the introduction of the capital from their account then the burden cast upon the assessee is discharged as held by the Andhra Pradesh and Telangana High Court in the case of CIT vs. M. Venkateswara Rao, [2015 (3) TMI 153 - ANDHRA PRADESH HIGH COURT]. Accordingly, in the interest of justice, we remit the issue back to the file of the Assessing Officer with a direction to the assessee to place necessary evidence confirming the capital contribution by above partner before the Assessing Officer. This issue is remitted back to the file of the Assessing Officer for fresh consideration. - Decided in favour of assessee for statistical purposes.
|