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Chirag D. Tanna Versus Asstt. Commissioner of Income Tax Circle-25 (3) , Mumbai and vice-versa

2012 (3) TMI 570 - ITAT MUMBAI

Transaction in F & 0 prior to 25.1.2006 to be treated as non speculation transaction - Additions made on account of F&O - Held that:- We uphold the grievance of the assessee and hold that the derivate transactions, entered into by the assessee at the recognized stock exchanges even prior to the date of notification in the relevant previous year, are to be treated as covered by the exclusion clause set out in section 43(5)(d). - Assessing Officer has to consider the composite transaction. Th .....

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rposes. - ITA no. 4227/Mum./2010, ITA no. 5027/Mum./2010 - Dated:- 14-3-2012 - SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER Assessee by : Mr. Rakesh Joshi Revenue by : Mr. D.S. Sunder Singh O R D E R PER J. SUDHAKAR REDDY, A.M. These cross appeals are directed against the impugned order dated 30th March 2010, passed by the Commissioner (Appeals)-XXXV, Mumbai, for assessment year 2006-07. Facts in Brief:- 2. The assessee is engaged in the business of jobbing .....

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r in appeal wherein the first appellate authority granted part relief. Aggrieved, the assessee as well as the Revenue are in appeal before the Tribunal. 3. We have heard the learned Counsel, Mr. Rakesh Joshi, representing the assessee and the learned Departmental Representative, Mr. D.S. Sunder Singh, representing the Revenue. 4. The grounds raised by the Revenue, reads as follows:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the A.O. to acc .....

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ns made on account of F&O for ₹ 4,37,903/- without appreciating the fact that the judgments relied upon by ld. CIT(A) are not applicable in this case. 5. Both the parties conceded before us that similar issue was considered by Mumbai J Bench of the Tribunal in M/s. Prem Associates Advertising & Marketing v/s JCIT, ITA no.6547/Mum./2009, order dated 17th September 2010, wherein the Tribunal, vide Para-7, held as follows:- 7. We find that it is undisputed position that the stock exch .....

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r. The issue is thus covered, in favour of the line of reasoning adopted by the assessee, by decision of the coordinate bench in the case of Anand Brothers (supra) and by Hon ble Gujarat High Court s judgment in the case of Claris Lifesciences (supra). We Respectfully following these decisions, we uphold the grievance of the assessee and hold that the derivate transactions, entered into by the assessee at the recognized stock exchanges even prior to the date of notification in the relevant previ .....

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t of the share trading loss of 47,37,483 as speculative loss under section 43(5) of the Act and not allowing set off against other share related profits without appreciating the facts and circumstances of the case. 8. After hearing rival contentions, we find that the Revenue authorities have not properly understood the nature of business of the assessee. The assessee submitted the following note to explain its nature of business:- The appellant is engaged in the business of jobbing / arbitrage a .....

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script on another exchange say NSE where the price quote is higher. Later during the same day, he may get further opportunity to square off such transactions in the particular exchange to avoid delivery of shares. But if he does not get this opportunity to square off in any of the exchange then either has to take the delivery or offer delivery of that scrip. In this activity he earns the difference between two exchanges. An important factor to carry out such transactions is that the trader shoul .....

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During the year the appellant carried out such transactions in various scrips, which he was holding in stock, between NSE & BSE. Now wherever he could square off the transactions, he has shown the net result in jobbing account and for transactions where he has to affect delivery, he shown them under sale & purchase. The transactions carried out by the appellant can be illustrated as follows: Scrip NSE BSE Result Scrip 1 +100 @ 102 -100 @ 105 Profit of 3 Scrip 1 -100 @ 101 - Exchangewise .....

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