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2020 (3) TMI 47 - HC - Income TaxNature of loss - business loss or speculation loss - HELD THAT:- A conjoint reading of clause (d) of the proviso to sub-section (5) of Section 43 of the Act and the explanation attached to it makes it clear that if a transaction in trading of derivatives is carried out electronically on screen based system through a stock broker or sub-broker and it is supported by a time stamped contract note issued by such broker which indicates unique client identity and PAN number of the client, it shall be “an eligible transaction” and shall not be deemed to be a “speculative transaction”. Tribunal while considering the appeal of the Revenue found that the CIT(A) at the time of deciding the appeal of the assessee against the addition made by AO treating the same as speculation loss, had called for the remand report to ascertain as to whether the assessee did fulfill the condition laid down under sub-clause (d) of proviso to Sub-section (5) of Section 43 - Contract notes were also produced by the assessee before the CIT(A), amongst which the note issued by the broker M/s Arihant Capital Market Ltd. through whom the assessee had undertaken the alleged transactions in respect of trading in derivatives i.e. F&O of shares was also examined in particular. The contract note clearly revealed that the transactions were supported by time stamped contract notes issued by the stock broker in which unique client identity and PAN number etc were also indicated in accordance with the explanation-1 attached to clause (d) of proviso to sub-section (5) of Section 43 of the Act. Section 43(5) of the Act was also discussed in the order by the CIT(A) and on the basis of the same, the CIT(A) had arrived at the conclusion that the assessee had fully satisfied the requirements under clause (d) of the proviso to Sub-section (5) of Section 43 of the Act. Revenue has failed to point out that the findings returned by the CIT(A) and the Tribunal are erroneous or are perverse in any manner or are based on mis-appreciation of material on record. Loss sustained by the assessee from the transaction of purchase and sale of the shares cannot be deemed to be speculation loss. Accordingly, we answer the substantial question of law against the appellant-Revenue in the present case that the loss as claimed by the Revenue is not a speculation loss.
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