TMI Blog2022 (1) TMI 1325X X X X Extracts X X X X X X X X Extracts X X X X ..... h the findings of the ld. CIT(A) and thus the ground of appeal No. 1 of the assessee is allowed. Disallowance of total expenses comprising of car expenses, shop expenses, Staff tea expenses and telephone and mobile expenses claimed by the assessee - HELD THAT:- During the course of hearing, the ld.AR of the assessee has not filed any written submission controverting the findings of the ld. CIT(A). Hence, Ground No. 2 of the assessee is dismissed. - ITA No. 214/JP/2018 - - - Dated:- 5-1-2022 - HON BLE SHRI SANDEEP GOSAIN , JUDICIAL MEMBER Assessee by : Shri Saurav Harsh , Advocate Revenue by: Smt. Monisha Choudhary , JCIT ORDER PER : SANDEEP GOSAIN , JM This appeal filed by the assessee is directed against order of the ld. CIT(A), Kota dated 11-12-2017 for the assessment year 2018-19 wherein the assessee has raised the following ground of appeal. 1. That on the facts and in the circumstances of the case, the lower authorities grossly erred in disallowing the NCDEX Trading Loss in the amount of Rs.39,88,783/- out of total loss of Rs.56,14,805/- by treating the same as Speculation Loss. 1.1 That on the facts and in the circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The assesee also submitted that the commodities transacted by him have been made exempt from Commodities Transaction Tax, therefore, nonpayment of CTT would not in any way affect the nature of the business being non-speculative. Further, the assessee had provided the contract notes and it was found that the transactions had been carried out through the broker Anand Rathi Commodities and all the trades had been executed NCDEX. In this case, the AO has revisited Section 43(5)(e) of the Act in the assessment order and observed that for the transaction to be out of purview of the speculative transactions, following conditions must be fulfilled. 1. It must be an eligible transaction. 2. The eligible transaction must be carried out in a recognized association 3. Commodity transaction tax (CTT) must be paid on it. It is noted that the loss of Rs.39,88,783/- was not allowed by the AO to be set off against the business of trading of physical commodities by observing as under:- From the above facts, it is quite clear that the eligible transaction is the one which is carried out in a recognized association and for this purpose, NCDEX was not the recognized asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made or directions issued under those Acts or by banks or mutual funds on a recognised stock exchange; and (B) which is supported by a time stamped contract note issued by such stock broker or sub-broker or such other intermediary to every client indicating in the contract note the unique client identity number allotted under any Act referred to in sub-clause (A) and permanent account number allotted under this Act, (ii) recognised stock exchange means a recognised stock exchange as referred to in clause (f) of section 273 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified by the Central Government for this purpose;] THE ITAT MUMBAI BENCH F in Varsha Corporation Ltd. u. Deputy Commissioner of Income-tax (OSD) -9(1) 45 taxmann.com 352 (Mumbai - Trib.) Section 43(5) of the Income-tax Act, 1961 Speculative transaction Assessment year 2009-10 Transactions done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terials available on record. It is undisputed that NCDEX terminal was not a recognized stock exchange as per Rule 6DDB r.w.s. 43(5)(d) of the Income Tax Act, 1961 at the relevant time. Ld. CITIA) while treating the loss as speculative has relied on ITAT Jaipur Bench judgment in ITA No. 91/JP/2013 dated 20.02.2013 in case of Prem Prakash Uma Shankar. Since the issue has been decided by the coordinate Bench, we find no valid reason to deviate from the same. In the interest of judicial discipline, we respectfully follow the same and uphold Id CIT(A) order. This solitary ground of the assessee is dismissed. NCDEX was notified as an exchange for the purposes of section 43 (5) only from 27.11.2013 onwards and the notification of the CBDT is also dated 29.11.2013. Thus The A.O was right on the facts involved that the assessee could not be given the benefit of the provisions of section 43 (5) (e) in respect of the transactions claimed. The appellant could not establish that these commodity contracts were delivery based, or that he had physical stocks of the traded commodity. In fact the appellant has himself submitted that Further in an alternative view the humble assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips: iv. That there was amendment in Section 43(5) of the act through finance act 2013 and sub clause (e) was newly inserted which is reproduce as under: 43(5)(e) an eligible transaction in respect of trading in commodity derivatives carried out in recognized stock exchange, which is chargeable to commodities transaction tax shall not be deemed to be a speculative transaction: v. That for the purpose of sub clause (e) the department through notification No. 90/2013 dated 27.11.2013 recognized the National Commodity and Derivatives Exchange Limited. vi. That Id, assessing officer during the assessment proceeding treated the transaction made prior to the notification dated 27.11.2013 i.e. Rs 39,88,783/- out of total transaction of Rs 56,09,655/- as speculation transaction by giving prospective effects to the said notification dated 27.11.2013. vii. That identical controversy came before the Hon'ble Delhi Court in the matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -I Page 6-7) ix Further we are submitting the comparison chart of the factual and legal dispute in the case of CIT v. Nasa Finelease P. Ltd ITA No. 647/2012 dated 06.09.2013 and in the case of the assessee appellant:- Nasa Finelease P. Ltd Ramavtar Krishavtar (Assessee appellant) loss of Rs1.90.29,988 in derivative transactions in National Stock Exchange. loss of Rs 56,14,805/- on account of trading in National commodity and Derivative Exchange, Period of transaction July 2005 to Sept. 2006 Period of transaction year 2013 to 2014 Transaction eligible u/s 43(5)(d) of the Act (w.e.f. A.Y. 2006-07) Transaction eligible u/s 43(5)(e) of the Act w.e.f. A.Y. 2014-15 Notification No. 2/2006 dated 25-01-2006 notifies National Stock Exchange and Bombay Stock Exchange for the purpose of transaction u/s 43(5)(d) of Act Notification No. 90/2013 dated 27-11-2013 notifies National Commodity and derivative Exchange for the purpose of transaction u/s 43(5)(e) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19-03-2019 whose relevant para is reproduced as under:- 50. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. In the instant case, the undisputed facts are that the assessee has suffered loss of Rs.4,69,47,808/- in trading in agricultural based commodity derivatives during the period 21.05.2013 to 22.08.2013. The assessee claimed the above loss as non-speculative loss and set off the same against other business income in the return of income filed for the assessment year 2014-15. 51. The AO has not allowed set off of this loss and treated the same as speculative business loss. 52. On appeal, the CIT(A) confirmed the action of the AO. 53. The above loss was treated as speculative loss on the ground that NCDEX association in which the said trade was carried out was notified as a recognized association u/s 43(5)(e) of the Act vide notification dated 27.11.2013 and the relevant trade was carried out during the period 21.05.2013 to 22.08.2013; secondly, Commodity Transaction Tax (CTT) was not paid in respect of the above transactions. 54. We find that clause (e) to Section 43(5) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar issue arose before the Hon'ble Delhi High Court in the case of CIT Vs NASA Finelease Pvt. Ltd. reported in 358 ITR 305 (Del.) wherein in relation to clause (d) of first proviso to Section 43(5) of the Act which was inserted w.e.f. assessment year 2006-07 and the recognized stock exchange was notified vide notification dated 25.01.2006 and therefore, the transaction which were otherwise eligible during the period 01.04.2005 to the date of notification were to be treated as nonspeculative or not was decided as under: 7. The factual position is not in dispute. Notification No.2/2006 dated 25th January, 2006, issued by the Central Board of Direct Taxes does not specify any particular date and simply notifies the National Stock Exchange India Ltd. and Bombay Stock Exchange, Mumbai under proviso (d) to clause (5) to Section 43of the Act. The said proviso had become applicable with effect from 1stApril, 2006.Issue of notification obviously had to take some time as it involved processing and examination of applications etc. This was a matter relating to procedure and the delay in issue of notification or even framing of the Rules was due to administrative constraints. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the above Second proviso was inserted w.e.f. 01.04.2019 and therefore, was not applicable in the assessment year 2014-15. 62. We find that vide inserting clause (e) in the First proviso to Section 43(5) of the Act, the Hon'ble Finance Minister stated In the Parliament as under: 149. There is no distinction between derivative trading in the securities market and derivative trading in the commodities market, only the underlying asset is different. It is time to introduce Commodities Transaction Tax (CTT) in a limited way. Hence, I propose to levy CTT on non-agricultural commodities future contracts at the same rate as on equity futures, that is commodities futures contracts at the same rates as on equity futures, that is at 0.001 per cent of the price of the trade. Trading in commodity derivatives will not be considered as 'speculative transaction' and CTT shall be allowed as deduction if the income from such transaction forms part of business income. As I said, agricultural commodities will be exempt. 63. Thus, from the speech of the Hon'ble Finance Minister at the time of insertion of clause (e), it is observed that all eligible transactions i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377 ITR 635 (Del.) wherein decision of the Agra Bench of the Tribunal in the case of Rajeev Kumar Agarwal Vs Addl.CIT (2014) 34 ITR (T) 349 (Agr.) was confirmed wherein it was held that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically by the statue. It was held that Second proviso to Section 40(a)(la) of the Act must be given retrospective effect of the point of time when the related legal provision was introduced. Thus, in view of the above discussion as in the instant case, it is not in dispute that the assessee's transactions in agricultural commodity derivative were otherwise eligible transaction within the meaning of Section 43(5)(e) of the Act, we set aside the orders of the lower authorities on this issue and direct the AO to treat the loss of Rs. 4,69,47,808/- in said transaction as non- speculative business loss and accordingly allow set off of the same from other business income as per law. Thus, this ground of appeal of the assessee is allowed. The Bench has also been apprised that Revenue has not challenged the order of ITAT Amritsar Bench (supra) at higher forum and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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