TMI Blog2011 (8) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, the assessment order does not suffer from a mistake apparent from record in the sense that there was no patent mistake of law. Therefore, it is held that the Assessing Officer did not have jurisdiction under section 154 to correct the mistake. - 1586 (DELHI) OF 2011 - - - Dated:- 5-8-2011 - C.L. SETHI, K.G. BANSAL, JJ. Salil Aggarwal for the Appellant. Salil Mishra for the Respondent. ORDER K.G. Bansal, Accountant Member The facts of the case are that the assessee had filed its return on 31-10-2005 declaring total income of Rs. 6,41,010. The assessment under section 143(3) was completed on 7-12-2007 at the same income. Thereafter, the order was rectified under section 154 on 3-7-2008, in which loss of Rs. 12,99,783 on future/option trading transactions was added to the income by mentioning that such loss is from the speculation business. The total income was assessed at Rs. 13,29,990 in this order. It was inter alia mentioned that a notice under section 154 was issued fixing the case on 27-6-2008 directing the assessee to file its explanation on the aforesaid issue. This notice was not attended to, nor any adjournment application was fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. In this connection, our attention was drawn towards the decision of "J" Bench of Mumbai Tribunal in the case of Dy. CIT v. SSKI Investors Services (P.) Ltd. [IT Appeal No. 3182 (Mum.) of 2004, dated 25-9-2007]. It has been mentioned in this order that the CIT (Appeals) found that the loss was incurred on account of derivative trading in assessee s own account. The derivative segment are all future trades but strictly speaking by definition of speculative transaction, there has to be purchase and sale of any commodity including stock and share. As derivative trading does not involve any purchase and sale of shares, the loss on account of derivative cannot be treated as speculation loss. The Tribunal held that the issue here is regarding trading in derivatives, which is a separate kind of transaction, without force of law. It is not possible to hold that the transaction was speculative in nature. Thus, the finding of the ld. CIT (Appeals) had been upheld. This decision was followed by "B" Bench of Mumbai Tribunal in the case of R.B.K. Securities (P.) Ltd. v. ITO [IT Appeal No. 2465 (Mum.) of 2006, dated 21-7-2008]. In paragraph No. 4 of this order, it has been mentioned that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court mentioned that the question to be examined is whether the definition contained in section 2(31) of the 1961 Act, is an amendment of law or merely declaratory of law which was in force earlier. In this connection, the Hon ble Court examined some other provisions of the Act and came to the conclusion that the position is not free from doubt. Accordingly, it has been held that a decision on a debatable point of law is not a mistake apparent from record. Further, reliance has been placed on the decision of Hon ble Delhi High Court in the case of CIT v. Richa Co. [2001] 252 ITR 40/[2002] 120 Taxman 671. In this case, an intimation was sent to the assessee under section 143(1)(a). Subsequently, action under section 154 was initiated for re-computing deduction under section 80HHC. The Hon ble Court mentioned that the deduction of claim made under section 80HHC could not have been changed by way of prima facie adjustment under section 143(1)(a), hence, there was no mistake in the order of intimation which could be rectified under section 154. Reliance has also been placed on the decision of Hon ble Supreme Court in the case of Mepco Industries Ltd. v. CIT [2009] 319 ITR 208/185 Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the term "speculative transaction" has been furnished in an exhaustive manner under section 43(5) to mean a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. There is no doubt that future and option transactions give rise to a right to purchase shares or securities at the agreed price on a future date. The transactions are settled otherwise than by delivery by paying the difference or forfeiting the money paid at the time of making the contract in the case of an option transaction. Such transactions apparently stand covered under the aforesaid definition. With increase in volume of derivative transactions, which include future and option, a need was felt that such transactions should be taken out from the ambit of speculative transaction in order to expand capital markets. Accordingly, clause (d) was introduced in the provision with effect from 1-4-2006. This amendment is not applicable to the proceedings of assessment year 2005-06 at hand. On the other hand, the ld. counsel relied on the decision in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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