2009 (10) TMI 633

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....gainst disallowance of loss on future and option transaction carried at the stock exchange by treating the same as speculation business loss. 3. The assessee is carrying on business as builder, developer and contractor. During the year it has also done trading in shares by way of future and option transactions. This resulted into a loss of Rs. 20,36,328, The Assessing Officer was of the opinion that loss in future and option segment is to be considered as speculation loss in terms of section 43(5) read with Explanation to section 73. The assessee submitted that the transactions are carried on through a broker M/s. Marck Securities Pvt. Ltd. who is a registered member of National Stock Exchange. The speculative transaction is defined in s....

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....ies Limited (IT Appeal No. 2465/Mum./2006), DCIT v. SSKI Investors Services Private Limited (ITA No. 3182/Mum./2004), P.S. Kapoor v. ACIT 29 SOT 587 , in the first 2 of the decisions, the assessment year involved was prior to assessment year 2006-07. It was during assessment year 2006-07 that amendment to section 43(5) was made by inserting clause (d) thereto. In case of P.S. Kapoor ( supra), it was only held that the provisions of section 43(5)(d) was clarificatory and hence retrospective. In the appellant's case, the assessment year involved is assessment year 2006-07. Accordingly, section 43(5)(d) read with Notification No. 2/2006, dated 25-1-2006, and Explanatory Memorandum in respect of Notification SO 89(E), dated 25-1-2006 would appl....

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....d the rival submissions. Section 43(5) defined 'speculative transaction' means a transaction in which a contract for the purchase or sale of any commodity including stocks and shares is periodical or ultimately settled otherwise than by the actual delivery or the transfer of commodity or scrips. Proviso below section 43(5) carves out exceptions to section 43(5). As per clause (d) of the said Proviso "an eligible transaction in respect of trading in derivatives referred in Securities Contracts (Regulation) Act, 1956 carried out in a recognized stock exchange shall not be deemed to be a speculative transaction." Clause (d) in the Proviso was inserted by Finance Act, 2005 with effect from 1-4-2006. Therefore, if a transaction falls within clau....