TMI Blog2016 (7) TMI 1566X X X X Extracts X X X X X X X X Extracts X X X X ..... JM And Shri N.S. Saini, AM For the Revenue : Shri R.P.Mourya For the Assessee : Shri Jitendra Jain ORDER PER SHRI N.S. SAINI, AM The appeal has been preferred by the revenue whereas the cross objection has been preferred by the assessee against the order dated 26.2.2015 of the learned CIT(A)-I, Bhopal. 2. The sole grievance of the revenue is that the learned CIT(A) erred in deleting the addition of ₹ 96,50,334/- made by the Assessing Officer on account of set off of loss claimed in transactions of shares F O of ₹ 96,50,334/-. 2. Brief facts of the case are that the assessee firm derives income from business of shares broker, trading in futures options (F O) of shares and commodities future. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions related to trading in derivatives and were eligible transaction within the meaning of section 43(5)(d) the Act and, therefore, the loss was not a speculation loss. It was, therefore, argued that the said loss was a business loss and, therefore, eligible for set off against the business income of the assessee. 4. The learned CIT(A) observed that it was not clearly mentioned in the assessment order whether the assessee produced all the contract notes before the Assessing Officer whereas the assessee contended that all the contract notes were produced before the Assessing Officer. Therefore, the copy of written submissions along with sample copy of contract notes were forwarded to the Assessing Officer with the request to verify the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the contract notes were furnished by the assessee before the Assessing Officer and, therefore, such contract notes were not additional evidence. It was contended that the transaction of the assessee was eligible transaction. It was, therefore, prayed that the amount of ₹ 96,50,334/- in the trading of derivatives (F O) of shares may be treated as business loss and addition made by the Assessing Officer treating the same as speculation loss may be deleted. 6. The learned CIT(A) after considering the submissions of the assessee as well as the remand report held as under :- 3.7 I have carefully considered the submission of the appellant, Remand Report of the A.O., Rejoinder of the appellant and facts of the case. The iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (b) 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; or (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; or (d) an eligible transaction in respect of trading in derivatives referred to in clause(ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange; or (e) an eligible transaction in respect of trading in commodity derivatives carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock exchange shall not be deemed to be a speculation transaction. In Clause (i) of Explanation below section 43(5) of the Act, the definition of eligible transaction has been given. In view of these provisions, a transaction in trading of derivatives shall not be deemed to be a speculation transaction if it fulfils the following conditions: - (i) The transaction is carried out electronically on screen-based system through a stock broker or subbroker;. (ii) The transaction is supported by a time stamped contract note issued by such stock broker; and (iii) In contract note, the Unique Client Identity No. allotted and PAN of the client is clearly indicated. It may be noted that the appellant had produced all the contract n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch shall not be deemed to be speculation transactions. Hence, the loss incurred by the appellant in the transactions in respect of trading in derivatives was not a speculation loss as defined in Section 43(5) of the Act and it was a business loss. Accordingly, the A.O. is directed to treat the loss of ₹ 96,50,334/- incurred in trading of derivatives (F O) in shares as business loss. Therefore, the addition of ₹ 96,50,334/- made the A.O. into the returned income on account of treating the same as speculation loss is deleted. Hence, this ground is allowed. 7. Before us, the learned DR submitted that there was a confusion in this case as in the assessment order it is mentioned that the assessee has set off the loss from shar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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