TMI Blog2023 (1) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... ay cause undue hardship to the assessee and unjust in a specific situation is to be read as retrospective with effect from which the main section was inserted. To the same effect is the decision of Ansal Land Mark Township Pvt. Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] wherein decision of Rajeev Kumar Agarwal [ 2014 (6) TMI 79 - ITAT AGRA] 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. 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 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. Disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the books of account i.e. computer generated cash book ledger, bills and voucher and also submitted the reply of the questionnaire with supporting details and these were examined by the AO on test check basis. From the assessment order, it is noted that the assessee derives income from trading of agricultural items and during the year the gross profit from this business activity has been declared at Rs.56,09,655/-. Against this profit, the assessee had claimed a loss of Rs.56,14,805/- on account of NCDEX and MCX Loss. In order to verify the loss declared by the assessee, the contract notes were called for by the AO from the assessee to justify the claim. The AO asked the assessee to explain as to why the loss may not be treated to be speculative in nature. To this effect the assessee submitted the reply mentioning that the loss was of the nature of regular business and also stated that in view of the provisions of Section 43(5)(e), the same cannot be treated as speculative and therefore, the same is allowable against the business income of the assessee. The assesee also submitted that the commodities transacted by him have been made exempt from Commodities Transaction Tax, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue against the appellant in the appeal no 57/16-17 for AY 2013-14 order dated 05/09/2017 A speculative transaction is defined as purchase or sale of any commodity, including stocks shares, periodically or ultimately settled otherwise than by the actual delivery or transfer. The following clause (e) was inserted in proviso to clause (5) of section 43 by the Finance Act, 2013, w.e.f. 1-4-2014: (e) an eligible transaction in respect of trading in commodity derivatives carried out in a recognised association shall not be deemed to be a speculative transaction.(Explanation)-For the purposes of this clause, the expressions- (i) commodity derivative shall have the meaning as assigned to it in Chapter VII of the Finance Act, 2013; (ii) eligible transaction means any transaction,- (A) carried out electronically on screen-based systems through a stock broker or sub- broker or such other intermediary registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with 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 Depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been inserted by the Finance Act, 2013 wef 1st April, 2014,which reads as under- (e) an eligible transaction in respect of trading in commodity derivatives carried out in a recognized association, shall not be deemed to be a speculative transaction. ....However, in the present case, as mentioned earlier, provisions of clause (e) of the prosso to Section 43(5) did not exist during the period when the assessee carried out the transactions. In view of above discussion, we hold that assessee is not entitled to claim the benefit of clause (e) of the proviso to Section 43(5) of the Act. In similar circumstances, the Jurisdictional ITAT Jaipur Bench in Shri Prem Prakash Gupta vs. ITO, Ward- 2 (3), Alwar relying on the same ITAT decision in case of Prem Prakash Uma Shankar disallowed the loss by holding it to be a speculative loss. The ITAT also considered the same case laws as are relied upon by the appellant in this appeal as well. ..We have heard the rival contentions and perused the materials 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same as speculation loss. 1.1 That on the facts and in circumstances of the case, the ld. Lower authorities grossly erred in not considering the submission made by the assessee appellant that the proviso to clause 5 of the section 43 of the Income-tax Act, 1961 is applicable from 1.04.2013, Delay in notifying the NCDEX as exchange cannot nullify the legislative mandate of the enactment. Delay was attributable to the Central Board of Direct Taxes, who failed to issue necessary notification within time. i. That assessee appellant is a Partnership Firm, which is Dealer Commission of all kind of agriculture products. ii. That assessee appellant during the year under consideration declare the non- speculation loss of Rs 56,14,805/- on account of trading in National commodity and Derivative Exchange. iii. That clause 5 of section 43 of the Income tax act discuss about the speculation transaction which is reproduce as under: Section 43(5) speculative transaction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r even framing of the Rules was due to administrative constraints. We agree with the tribunal that the delay occasioned, as procedure and formalities have to be complied with, should not disentitle and deprive an assessee, specially, when the transactions were carried through a notified stock exchange. The aforesaid delay is not attributable to the assessee. The notification, therefore, merits and should be given retrospective effect. Notification was procedural and necessary adjunct to the Section enforced with effect from 1st April, 2006. The rule and notification issued in the present case effectuate the statutory and the legislative mandate. There is no good ground or reason why the notification in question should not be given effect from 1st April, 2006. No reason or ground is alleged or argued to contend that National Stock Exchange India Ltd. could not and should not have been notified from 1st April, 2005. (Copy of order is enclosed at Paper Book -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:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 taxmann. Com 238 (Mumbai- Trib) 5. Shri Prem Prakash Gupta vs ITO (ITA No. 599/JP/2013 dated 11-08-2013 2.5 The Bench has heard both the parties and perused the materials available on record and also taken into consideration the case laws cited by both the sides. In this case, it is noted that the AO during the course of assessment proceedings treated the transaction made prior to the notification dated 27-11-2013 at Rs.39,88,783/- out of total transaction of Rs.56,09,655/- as speculation by giving prospective effects to the said notification dated 27-11-2013 which has been confirmed by the ld. CIT(A). It is not imperative to repeat the facts as narrated by the ld.CIT(A) in his appellate order but the Bench noted that the issue in question is directly covered by the decision of ITAT Amritsar in the case of P.D. Sekharia Trading Company Pvt. Ltd. vs DCIT (ITA No. 331/Asr/2018 dated 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 recognized association as referred to the 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: 56. The contention of the Revenue is that though the provision was inserted w.e.f. assessment year 2014-15 but as the recognized association was notified by the notification dated 27.11.2013, the eligible transaction entered into prior to that date will not quantify as non-speculative transaction. . We find that similar 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of trading transaction of the assessee under consideration and therefore, the same does not quantify for being treated as non- speculative. 60. We find that it is not in dispute that the trading transactions of the assessee were in agricultural commodity derivatives. As per the provisions of law, no CTT is legally chargeable in respect of agricultural commodity derivatives. The Id. AR of the assessee drawn our attention to the Second proviso to Section 43(5) of the Act inserted by the Finance Act, 2018 which reads as under: Provided further that for the purposes of clause (e) of the first proviso, in respect of trading in agricultural commodity derivatives, the requirement of chargeability of commodity transaction tax under Chapter VII of the Finance Act, 2013 (17 of 2013) shall not apply. 61. The Id. DR pointed out that 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TT. 65. In the above back ground, in our considered view, the Second proviso which has been inserted by the Finance Act 2018 is curative and therefore is to be treated as came into force from the date from which clause (5) itself was inserted In the statute i.e. with effect from 01.04.2014. Our above view finds support from the decision of the Hon'ble Supreme Court in the case of Allied Motors Pvt. Ltd. Vs CIT 224 ITR 677 (SC) wherein it was held that a proviso which is designed to eliminate unintended consequence which may cause undue hardship to the assessee and unjust in a specific situation is to be read as retrospective with effect from which the main section was inserted. 66. To the same effect is the decision of the Hon'ble Delhi High Court in the case of CIT Vs Ansal Land Mark Township Pvt. Ltd. 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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