TMI Blog2022 (5) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (e) of the first proviso of section 43(5), the expression commodity derivatives shall have the meaning as assigned to it in Chapter VII of the Finance Act, 2013. In the impugned order, the ld. CIT(A), without considering this aspect of the matter, has confirmed the Assessing Officer s observations, holding that the assessee could do two businesses, but the accounts should have been maintained separately; that the assessee has wrongly set off loss of speculative business with regular business; and that the assessee does not have the expertise of doing trading in commodities. Firstly, no case of intermingling of expenses stands made out. The loss from trading in commodity derivatives has been identified to the last rupee. The issue is as to whether such loss can be set off against other business loss. Next, as discussed herein above, in keeping with clause (e) of the first proviso to section 43(5), the loss incurred is not a speculative loss. Now, coming to the issue as to whether the loss from trading in commodity derivatives, which, as above, is not a speculative loss, has rightly been set off by the assessee against regular business profits from medical derivative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in commodities is a kind of speculation in commodity trading business and that loss suffered in derivatives commodity trading can be set off only against its own head, and not against the business head. 3. By virtue of the impugned order, the ld. CIT(A) confirmed the addition. Aggrieved, the assessee is in further appeal. 4. Arguing Ground nos. 3 4, the ld. Counsel for the assessee has contended that the loss in commodity derivatives trading business was non-speculative and hence, the ld. CIT(A) has erred in confirming the action of the Assessing Officer in not setting off the same against other business income. It has been contended that the assessee is carrying on two businesses, one of medical derivatives and the other of dealing in the derivatives of commodities, shares and securities in recognised Stock Exchanges; that the profit and loss account filed had income and loss of both the businesses, though in the computation, the profit of medical derivatives and loss of derivatives was shown separately under the head of Income from Business and Profession ; that all the documents/evidences for the loss incurred in the derivatives business, were filed with the authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed a speculative transaction, a transaction shall, as per clause (e) of the first proviso to section 43(5): (a) Be an eligible transaction (b) In respect of trading (c) In commodity derivatives (d) Carried out in a recognized association (e) Chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013. 10. Let us see if the assessee fulfills all the conditions prescribed by section 43(5) first proviso (e). 11.1 Explanation 2(ii) to clause (e) of the first proviso defines eligible transaction as follows: eligible transaction means any transaction,- (A) carried out electronically on screen-based systems through member or intermediary, recognized 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 direction issued under that Act on a recognised association; and (B) which is supported by a time stamped the contract note issued by such member or intermediary to every client indicating in the contract note, the unique client iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. As for the Assessing Officer, he states that the assessee does business in non-agricultural trading, for which, he had not submitted any expertise. Now, this is nowhere the requirement of clause (e) of the first proviso to section 43(5), as discussed above. There is no bar of expertise requiring trading in commodity derivatives, if the assessee, being a Doctor, practices in Radiology. It is also not correct to state, as has been done by the Assessing Officer, that the assessee is trading in commodities rather than in commodity derivatives, which is speculative in nature. As per the details of loss from derivatives business incurred by the assessee, such derivatives were with regard to Crude oil, Nickel, etc., and Currency derivatives. The confirmations from the recognised Associations were filed, as previously noted. Nowhere have the authorities below denied that the commodity derivatives are commodity derivatives as prescribed under Chapter VII of the Finance Act, 2013. In this regard, clause (i) of Explanation 2 to section 43(5) specifically states that for the purposes of clause (e) of the first proviso of section 43(5), the expression commodity derivatives shall have the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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