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TMI Blog2003 (1) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... "A. Whether the Income-tax Appellate Tribunal was right in holding that loss of Rs. 10,05,740 on account of sale of shares is a hedging loss and is not a speculative loss as held by the Assessing Officer? B. Whether the Income-tax Appellate Tribunal was right in not appreciating that the transaction related to speculative loss as covered under section 43 of the Act? C. Whether the order of the Income-tax Appellate Tribunal in holding that Rs. 10,05,740 is a business loss, is perverse and has ignored the fact that actual delivery of the shares was not taken by the assessee? D. Whether the Income-tax Appellate Tribunal has correctly interpreted applied section 43(5), Explanation 2 to sections 28 and 73 of the Income-tax Act, 1961, and cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee had itself sold some shares on May 31, 1987, at Rs. 170 per share and, therefore, it could not be believed that the market rate on May 26, 1987 and May 27, 1987, varied between Rs. 122 and 128 per share; (iii) there was no contract between the buyer and the seller and, therefore, the transaction could not be considered as an exception to section 43(5), proviso (b) of the Act ; and (iv) the assessee did not discharge the onus which lay upon it to prove that the sales in question were for safeguarding further loss. Aggrieved, the assessee preferred appeal to the Commissioner (Appeals) who agreed with the assessee. While holding that the said loss was a hedging loss and was to be allowed as such, the Commissioner (Appeals) correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract, where the transaction is settled otherwise than by physical delivery of shares, does not and cannot contain distinctive numbers of the shares ; the assessee had adequately discharged the onus to prove that the transaction was not a speculative transaction and since the shares involved in the transaction were physically in the possession of the appellant and since they represented a smaller portion of the total shareholding, it was clear that the intention of the assessee was not to speculate but to safeguard against further loss. Being dissatisfied with the said order, the Revenue carried the matter in further appeal to the Tribunal but without success. While affirming the view taken by the Commissioner (Appeals), the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced any resolution passed by the board of directors of the assessee-company to indicate that a conscious decision had been taken to go in for such a transaction to guard against future loss. It is asserted that the transaction having been entered into just a few days before the end of the previous year, it was, per se, speculative in nature. Mr. C.S. Aggarwal, learned counsel for the assessee, on the other hand, while supporting the orders of the appellate authorities would submit that the genuineness of the transaction not being in dispute, the conclusions arrived at by the two appellate authorities with regard to the existence of the contract and the intention behind the transaction are pure findings of fact, therefore, the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he existence of the contract and the intention to enter into such a contract, on which the answer to the question whether a trans action is a hedging transaction or not rests, is primarily one of fact, necessarily to be determined on appreciation of facts surrounding the transaction. Alternatively put, the conclusion that a transaction is a hedging transaction is arrived at on the basis of primary and relevant facts and not by mere application of a principle of law. The finding of the Tribunal on the question is not liable to be interfered with unless it is found that the Tribunal has taken into consideration any irrelevant material or has failed to take into consideration any relevant material or that the conclusion arrived at by it is per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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