TMI Blog2011 (11) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... without appreciating the facts and circumstances of the case and case laws relied upon by the appellant. 2. That the learned CIT(A) erred in upholding that loss of ₹ 13,41,565/- is in the nature of speculative loss not available for set off against business income without appreciating the facts and circumstances of the case and the legal position. 3. That the learned CIT(A) erred in holding that expenditure of ₹ 24,480/- incurred on installation of V-Sat at the locations of Sub- Brokers is in the nature of capital expenditure having enduring effect without appreciating the facts and circumstances of the case. 3. Ground no.1 of the assessee has not been pressed by the ld. Authorised Representative appearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing but are the transaction of sales and purchase of shares on its own behalf made by the assessee during the year. After going through the Section 73 and its Explanations, it is seen that the assessee s claim is miscounted. The definition of Speculative transaction in section 43(5) has been considerably diluted by the addition of an Explanation to section 73, by the Taxation Laws (Amendment) Act, 1975, w.e.f. 01.04.1977. The scope and sweep of Speculation business was extended by insertion of Explanation to Section 73 of the I.T. Act, which states as under :- 73. Losses in Speculation business Explanation Where any part of the business of a company other than a company whose gross total income consists mainly of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in explanation 2 to section 28 has been incorporated in the I.T. Act to make the operation of section 73 effective. Explanation 2 to section 28 states that if an assessee carries on a speculative transaction of such a nature as to constitute a business, such business should be deemed distinct and separate from any other business. A perusal of the P L Account filed along with the return of income reveals that the company is not a company whose gross total income consists mainly of income chargeable under the heads interest on securities , income from house property , Capital Gain , and income from other sources . It is also an undisputed fact that the company is not in the business of banking or granting of loans and advances and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as speculation loss. Since the assessee has no other speculation business and this loss can only be set off against profits and gains, if any, of another speculation business carried on by the assessee, this loss shall be carried forward to the following assessment year as per the provisions of sub-section (2) of section 73 of the I.T. Act, 1961. 5. The ld. CIT(A) confirmed the action of the A.O. 6. We have heard the rival contentions and perused the facts of the case. Speculative transactions have been defined in section 43(5) of the Income Tax Act to mean a transactions for the purchase or sales of any commodity, including stock and shares. It is evident from the definition itself that dealing in only three kinds of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, currency, economic variable or financial instrument. The different types of derivatives are future contracts, forward, swaps and options . They are traded on derivatives markets over the counter (OTC). The market traded derivatives are standard but the OTC trades can be customized with regard to maturity, quantity, or pricing structure for a particular client. The disclosure of derivatives in financial statements is required by Financial Reporting Standard- 13 . A speculative transaction as per section 43(5) means a transaction in which the contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by actual delivery or transfer of commodity or scrip. A derivat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, we direct the A.O. to allow the claim of the assessee. Therefore, order of ld. CIT(A) is reversed on the issue. Thus, ground no.2 of the assessee is allowed. 8. As regards ground no.3, the brief facts of the case as per the Assessing Officer s order at page no.4 are as under :- The assessee has debited ₹ 24,480/- in Profit Loss account under the head installation charge (V. Sat). The assessee was asked to explain why these expenses should not be disallowed being of Capital Nature. The assessee has explained that V. Sat is a Terminal which is installed at the premises of Sub-brokers and the assessee has to bear part of these installation charges. Since these expenses are incurred on installation of V. Sat, and are of Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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