2010 (5) TMI 606

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....g Officer in treating transaction in derivatives segment as speculative transactions and accordingly not allowing set-off of loss from such transaction against other income without considering the facts and circumstances of the case. 2. On the facts and circumstances of the case as well as in law, the ld. CIT(A) has erred in confirming the action of ld. Assessing Officer for allocating expenses of Rs.2,60,276/- alleging to be incurred for the purpose of speculative transaction without considering the facts and circumstances of the case. 2. The only issue for consideration relates to not allowing the loss incurred on derivative transactions against the trading shares. The facts of the case, stated in brief, are that the assessee during....

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....segment w.e.f. 01/4/2006 would not be treated as speculation transactions. Therefore, for Assessment Year 2006-07, the loss incurred under derivates segment was business loss which was to be set off against the profit earned against cash segment. This contention of the assessee was turned down by the ld. CIT(A) on the ground that Bombay Stock Exchange and National Stock Exchange were notified w.e.f. 25/1/2006 and, therefore, the eligible transactions for the purpose of sec. 43(5)(d) shall include only those transactions which took place on BSE and NSE after their notification i.e. 25/1/2006. Ld. CIT(A) examined the contention of the assessee in the light of explanatory memorandum and held that transactions in nature of derivatives transacti....

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.... to be in the nature of speculative transactions. Prior to this date, they will be in the nature of speculative transactions, which cannot be said to be set off against other business income. She placed reliance on the Board's Notification No.2 dated 25/1/2006. 6. We have heard both the parties and gone through the material available on record. Clause (d) of sec. 43(5) was inserted by the Finance Act, 2002 w.e.f. 01/4/2006, therefore, the transactions carried on in derivatives in a recognized stock exchange shall be deemed to be speculative transactions w.e.f. 01/4/2006. In the instant case, National Stock Exchange and Bombay Stock Exchange were recognized as stock exchanges vide C.B.D.T. Notification No.2 dated 25/1/2006. Prior to this ....