TMI Blog2003 (1) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Appellate Tribunal has correctly interpreted applied section 43(5), Explanation 2 to sections 28 and 73 of the Income-tax Act, 1961, and correctly held that the loss of Rs. 10,05,740 is not on account of speculative transaction of business?" - In the present case the two appellate authorities have recorded concurrent findings of fact about the existence of the contract between the parties and the intention of the parties to enter into the transaction, namely, to guard against loss in the holding of stocks and shares through future price fluctuations. - order of the Tribunal does not give rise to any question of law, much less a substantial question of law. - - - - - Dated:- 7-1-2003 - Judge(s) : D. K. JAIN., MAHMOOD ALI KHAN. JU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources as well, including interest and dividend from shares. For the assessment year 1988-89, the assessee filed its return declaring an income of Rs. 27,86,630, but was assessed on a total income of Rs. 39,60,615. The main reason for the difference between the returned income and the assessed income was the addition of Rs. 10,05,740, representing the disallowance of the amount claimed by the assessee as hedging loss. In this appeal we are concerned with this addition. The said loss was claimed under the following circumstances: On May 26, 1987 and May 27, 1987, the assessee had sold 77,000 shares of Food Specialities Limited through a broker, namely, Bharat Bhushan and Co. for a total sum of Rs. 95,66,250, at rates varying from Rs. 120 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 170 per share on January 31, 1987, and not on May 31, 1987, as noted in the assessment order; the fall in value of shares on May 26, 1987, and May 27, 1987, was in comparison to the rate prevailing on January 31, 1987, and not on May 31, 1987, and that the transaction in question was only in 77,000 shares, which was far less than the total shareholding of the assessee. Observing that the shares sold and repurchased bear a reasonable proportion to the stocks held in hand, the Commissioner (Appeals) held that the assessee was not trying to speculate in the shares by putting all the shares on sale for repurchase and its dear intention was to reduce investment loss by selling the shares in question for repurchase in the depressed market so th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed market with the same intention as also to boost the market so that the share value would not go down further. Rejecting the contention of the Revenue that the assessee's claim could not be accepted as distinctive numbers had not been mentioned and there was no physical delivery, the Tribunal observed that if these two things would have been there, then there was no need to refer to section 43(5) and its exceptions, since the said section deals with speculative transactions and the three exceptions pertain to those transactions which at first look will fall under the same category but are deemed not to be so. Hence, the present appeal. We have heard Mr. R.D. Jolly, learned senior standing counsel for the Revenue, and Mr. C.S. Aggarwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any commodity, which may include stocks and shares, is periodically or ultimately settled otherwise than by actual delivery or transfer of the commodity or scrips. However, certain exceptions to the definition of "speculative transaction" are provided in a proviso to section 43(5). Clauses (a), (b) and (c) of the proviso enumerate the contracts which are not deemed to be speculative transactions. For the present case, clause (b) of the proviso is relevant and it provides that a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations shall not be deemed to be a speculative transaction. Proviso (b) contemplates a transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the contract between the parties and the intention of the parties to enter into the transaction, namely, to guard against loss in the holding of stocks and shares through future price fluctuations. In the light of the facts found by the Commissioner (Appeals) and the Tribunal, which have not been challenged by the Revenue by means of a specific question, we find it difficult to hold that the aforenoted conclusions reached by the Tribunal are based on no evidence or are perverse or patently unreasonable. We are, therefore, of the opinion that the view of the Tribunal that the trans action in question fell within the ambit of the proviso (b) to clause (5) of section 43 cannot be faulted. For the foregoing reasons, we are of the opini ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
