TMI Blog2018 (10) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase consideration and related expenses as per conveyance deed dated 7.6.2012, however he has not allowed the claim of ₹ 30,65,000/- Held that:- The findings of the ld CIT(A) are based on right appreciation of the conveyance deed duly corroborated by the pictures of the constructed rooms as well as domestic electric connection taken in the name of the seller. During the course of hearing, nothing has been brought to our notice to controvert the said findings of the ld CIT(A). Hence, we hereby confirm the said findings of the ld CIT(A) that the property so purchased by the appellant was a residential house eligible for deduction under section 54 of the Act. As far as claim of ₹ 30,05,000 is concerned, nothing has been brought on record which demonstrate that such cost has been incurred towards any refurbishment/renovation of the residential house so purchased. - ITA No. 177/JP/2017, ITA No. 202/JP/201 - - - Dated:- 1-6-2018 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Mahendra Gargieya (Adv) For the Revenue : Shri J.C. Kulhari (JCIT) ORDER PER: VIKRAM SINGH YADAV, A.M.: These are cross appeals filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41,404/-, and after considering the same and the indexed cost of acquisition of ₹ 4,79,58,596/-, long term capital gain on sale of said property was computed at NIL. In the notes to the computation of income, it was shown as the land purchased on 07/6/2012 for ₹ 1.40 crores, registration charges paid of ₹ 11.00 lacs and it was further stated that the assessee will construct a house in the same land within three years period for an amount of ₹ 70.00 lacs. Accordingly, no capital gain liability was computed by taking into consideration the deduction under provisions of Section 54 of the Act. Thereafter, the assessee filed a revised return of income on 11/2/2013 wherein deduction U/s 54 of the Act was computed at ₹ 50.00 lacs and in the notes to computation of income, it was stated that the assessee shall invest ₹ 50 lacs on construction of residential house. Accordingly, a revised capital gains liability was computed at ₹ 1,70,41,404/-. Thereafter, during the course of assessment proceedings, the assessee filed another revised computation of income wherein deduction U/s 54 was shown as investment in house property and the amount stated to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en a dwelling unit. It was further observed by the Assessing Officer that if the assessee had bought a residential house then why not the assessee claimed the deduction of residential house in first place rather than mentioning proposed construction of house on the plot, which clearly shows an afterthought on the part of the assessee. It was further stated by the Assessing Officer that the assessee has not deposited any amount in the capital gain account scheme and claimed investment in residential house directly to surpass the deposit scheme and availed deduction U/s 54 of the Act. Further the Assessing Officer observed that the question of allowability of additional deduction, what is not claimed in the return of income will only arise if the deduction is prima facie valid and referring to the Hon'ble Supreme Court decision in the case of Goetze (India) Limited Vs CIT (2006) 157 Taxman 1 wherein it was observed by the Hon'ble Supreme Court that the A.O. could entertain a claim only if made in the return/revised return. Accordingly, the Assessing Officer did not allow the claim of the assessee U/s 54 of the Act and computed long term capital gain liability in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as claimed at ₹ 1,77,69,740/- u/s 54 and there appears no justification at all behind the part allowance of the deduction up to ₹ 1,47,64,740/- only. The facts are not denied that the assessee has already incurred total cost ₹ 1.78 Cr. up to 30th Sep, 2012 (which was well within the permissible time limit of two years from the date of the transfer being 30.01.2012, expiring only on 31.01.2014) whereas, the assessee had incurred total cost much prior thereto. The investment of ₹ 1.48 Cr was already made up to 07.06.2012 and further cost of ₹ 30,05,000/- was incurred up to 30.09.2012 totaling to ₹ 1.78 Cr with the prescribed period of two years. The ld. CIT(A) though noted the facts and claims made but has been silent and has not given any finding. 10. We have heard the rival contentions and purused the material available on record. It is not in dispute that a claim towards deduction under section 54 was made by the assessee while filing his original return of income and thereafter, there have been revision in the quantum of such claim during the course of assessment proceedings. The AO has not allowed the said claim holding that what ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed and the order of the ld CIT(A) is hereby confirmed. 12. Now, coming to the main ground of assessee s appeal wherein the assessee has challenged the disallowance of commodity loss of ₹ 9,10,126/-. Briefly stated, facts of the case are that during the year under consideration, the assessee has incurred loss of ₹ 9,10,126/- in respect of trading in commodities derivatives on MCDX and NSC and the same was claimed as setoff against the normal business activities. The Assessing Officer referring to the definition of speculative transaction as defined in Section 43B(d) stated that trading in derivatives referred to in Section 2(ac) of he Securities Contracts (Regulation) Act, 1956 carried out on a recognized stock exchange is not deemed to be a speculative transaction. The recognized stock exchanges are NSC, BSE, MCX and United Stock Exchange of India. The income derived from such transactions carried on these recognized exchanges in periods thus notified, will be treated as non-speculative i.e. business income. However, commodity derivatives are considered as eligible transactions if traded on recognized stock exchanges only from 01/4/2014 as per the amended defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m derivative have been defined in that act as under 2(ac) Derivative includes- (A) a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security ; (B) a contract which derives its value from the prices, or index of prices, of underlying securities; 3.1 Here it is to be clarified that the word derivative is a term of wide import which includes the share derivatives as well as commodity derivatives. Accordingly, even a contract for difference or any other form of security also falls under the term derivatives. 3.2 It may further be clarified that the provisions of the Securities Contract Regulations Act fully applies to both type of derivatives whether shares derivatives or commodity derivatives for the reason that sec 2(h) of the Act, which defines 'Securities also includes derivatives and then derivatives u/s 2(ac), as reproduced above also includes both type of derivatives. Definition of security u/s 2(h) of SCRA is as under: (h) securities include- (i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pter VII of the Finance Act, 2013; (ii) eligible transaction means any transaction,- (A) carried out electronically on screen-based systems through member or an intermediary, registered under the bye-laws, rules and regulations of the recognised association for trading in commodity derivative in accordance with the provisions of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) and the rules, regulations or bye-laws made or directions issued under that Act on a recognised association; and (B) which is supported by a time stamped contract note issued by such member or intermediary to every client indicating in the contract note, the unique client identity number allotted under the Act, rules, regulations or bye- laws referred to in sub-clause (A), unique trade number and permanent account number allotted under this Act; (iii) recognized association means a recognised association as referred to in clause (j) of section 2 of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) and which fulfils such conditions as may be prescribed and is notified by the Central Government for this purpose; In case of the assessee, the subjected derivative trad ..... 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