TMI Blog2024 (1) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year. The debts arisen in the normal course of business - AO concluded that the Assessee had undertaken speculative and non-speculative trades but had not maintained separate accounts, thus treating the loss as speculative loss permitted to be set off against speculative profit and gains of other speculative business only in terms of Section 73 of the Act. - CIT(A) concluded that all the transactions undertaken by the Assessee were not non-speculative in nature and thereby discarded the incorrect bifurcation made by the Assessing Officer and allowed the set off of loss HELD THAT:- We find no infirmity in the order passed by the CIT(A) as the CIT(A) has granted relief by following the decision of Mumbai Bench of the Tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act ). 2. The Revenue has raised following grounds of appeal: 1. Whether Ld.CIT(A) is right in deleting the addition made u/s 43(5) of the Act towards speculative loss without appreciating action of the Assessing Officer. 2. The Ld. CIT(A) has grossly erred in deleting the addition made u/s 43(5) of the Act towards speculative loss. 3. The Ld. CIT(A) has also erred in deleting of total addition of Rs. 3,18,43,201/- as the same was dealt by the AO and ultimately treated the same as speculative loss based upon its nature of transaction and investment made by the future and options by entering the contract without bringing the complete details of the contract on record whether contract is matured on or before 31.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dity. Thus, NSEL operated both spot and future contracts for commodities. The Assessing Officer concluded that the Assessee had undertaken speculative and non-speculative trades but had not maintained separate accounts. Therefore, the Assessing Officer computed the losses arising from speculative transaction by allocating/appropriating receipts and payments to arrive at the figure of INR 3,18,43,201/- as the loss arising from speculative transactions undertaken by the Appellant during the relevant previous year. The Assessing Officer completed the assessment vide Assessment Order, dated 30/12/2016, passed under Section 143(3) of the Act treating the loss of INR 3,18,43,201/- as speculative loss permitted to be set off against speculative pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of assessment proceedings, the appellant relying on the decision of Hon'ble Supreme Court of India in the case of TRF Ltd vs. CIT (2010) 323 ITR 397 (SC) and relying on CBDT circular 12/2016 dated 30/07/2016 had submitted before the AO that the bad debts arised out of transaction with NSEL are eligible for deduction u/s 36(1)(vii). However the AO had denied the claim of the Appellant. The observation of the AO in para 5.4 of the assessment order is reproduced as under:- 5.4. While considering the facts of the case it is to be noted that the National Spot Exchange (NSEL) operated in the domain of pair trading of commodities, Le, traders were required buy on the near contract and sell on the far side in every comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/- is treated as business loss. Thus the ground raised by the Appellant is allowed. 6. The Revenue is now in appeal before us challenging the above relief granted by the CIT(A). 7. We have considered the rival submissions and perused the material on record. The facts as emanating from the record are that during the relevant previous year the Assessee undertook trade in commodities on the NSEL through its broker. In the Profit Loss Account for the relevant previous year the Appellant recognized Purchases of Commodities (NSEL) amounting to INR 21,25,20,041/- and Sales of Commodities (NSEL) amounting to INR 21,62,66,114/-. The Appellant also debited to the Profit Loss Account INR 3,42,63,568/- as bad debts written off during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of Mumbai Bench of the Tribunal in the case of Nirshilp Securities Pvt. Ltd. (supra) wherein it has been held that the commodities transaction undertaken on NSEL were paired purchase sale transactions backed by the delivery of commodities as per warehouse receipt issued/retained by NSEL accredited warehouses which did not fall in the definition of speculative transaction as defined in Section 43(5) of the Act. The aforesaid decision of the Tribunal in the case of Nirshilp Securities Pvt. Ltd. (supra) has been followed by the Mumbai Bench of the Tribunal in the case of Smt. Asha Devi Poddar Vs. ACIT-19(1), Mumbai, (ITA No. 687/Mum2022, dated 05/08/2022, Assessment Year 2014-15). Respectfully following the aforesaid decisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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