TaxTMI 
TaxTMI 
2012 (11) TMI 761
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...."(1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) IV, Surat has erred in allowing set off of speculative loss on account of commodities trading of Rs. 91,13,122/- against the business income of Rs. 1,23,60,835/-. (2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) IV, Surat ought to have upheld the order of the A.O. (3) It is, therefore, prayed that the order of the Ld. CIT(A) IV, Surat may be set aside and that of the A.O. restored." 3. Brief facts till the assessment stage are noted by Ld. CIT(A) on pages 1, 2 & 3 of his order, which are reproduced below: "The brief facts of the case are that for the year under consideration assessee earned profit of Rs. 1,41,80,518/....
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....01.06 to 31.03.06. However, the assessing officer was not satisfied with the reply of assessee. He stated that trading in derivatives is the new adventure in the nature of trade in which concept of actual delivery has become irrelevant. He placed reliance on the Advance Ruling in the case of Morgan Stanley & Co. International Ltd. - 272 ITR 416 holding that income from trading in derivative trading in case of global FII such as Morgan Stanley should be considered only as business income. He reproduced relevant portion of sec 43(5) notifying the amendment made in the section by Finance Act, 2005 at Para no. 10.9 of the assessment order & the Circular no. 3/2006 dated 27.02.06 in Finance Act, 2005 at Para no.3.10 of the assessment order. He p....
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....e, it was held by the tribunal that Rule 6DDB is only procedural in nature and, therefore, it is retrospective and hence, the notification dated 25.01.2006 would be effective form 01.04.2005 and it would be applicable to the entire assessment year 2006-07. He submitted that as per this tribunal decision, the income of the assessee from derivative transaction is not speculation income and hence, it cannot be adjusted against speculation loss arising on account of commodity trading of Rs. 91,13,122/-. He further submitted that there is one more Tribunal decision in the case of Tejas K Shah v. ITO [I.T. Appeal No. 2255/Ahd/2010 dated 17.09.2010] wherein, it was held that the transaction up to the date of notification is to be treated as specul....
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....k exchanges may be notified in future also and, therefore, this view cannot be taken that whenever the stock exchange is notified, the same should be considered as approved notified stock exchange for the purpose of Section 43(5) w.e.f. 01.04.2005. 7. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the judgements cited by both the sides. We find that the relevant amendment being insertion of clause (d) in sub-section (5) of Section 43 of the Act is w.e.f. 01.04.2006. The same is reproduced below for the sake of ready reference:- "43(5)(d): an eligible transaction in respect of trading in derivatives referred to in clause (ac) of Section 2 of the Securit....
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....f publication of the notification in the official gazette and such date of publication regarding notification for BSE and NSE is 25.01.2006. We find that the tribunal decision rendered in the case of Hiren Jaswantrai Shah (supra) is dated 17.06.2011 whereas, the tribunal decision rendered in the case of Shri Tejas K. Shah (supra) is dated 17.09.2010. In the case of the tribunal decision rendered in the case of Hiren Jaswantrai Shah (supra), the other tribunal decision rendered in the case of Tejas K. Shah (supra) was not cited and not considered although the members constituting both these benches were the same. This is now a settled position of law that the earlier tribunal decision is binding on the tribunal and if such decision is not co....
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....rendered in the case of Tejas K. Shah (supra). We therefore, decide this issue in favour of the assessee by respectfully following the Tribunal decision rendered in the case of Tejas K. Shah (supra). 9. In the result, appeal of the revenue is dismissed. 10. Now, we take up the C.O. filed by the assessee. The grounds raised in the C.O. are as under: "1. On the facts and in circumstances of the case as well as law on the subject, the learned assessing officer has erred in treating business loss of Rs. 91,13,122/- on account of commodity derivative transactions as speculative loss instead of non-speculative loss and thereby not allowing set off against business profit from shares in derivative trading. The learned CIT(A) did not....