TaxTMI 
TaxTMI 
2015 (8) TMI 70
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.... of the appeal." 2. At the outset of hearing, learned AR does not want to press Ground No.1. Hence the same is dismissed as not pressed. The only issue remains with regard to disallowance of loss of Rs. 4,82,270/- incurred by the assessee company on trading in commodity derivatives. The Assessing Officer made disallowance of loss of Rs. 4,82,270/- incurred on commodity derivative. The Assessing Officer while making the disallowance observed as under: "During the course of assessment proceedings it was noticed that the assessee had incurred a loss of Rs. 482270/- on commodity trading which had been claimed as regular business expenditure rather than as a speculation loss that would not be allowed to be set off against the regular business income. The assessee was asked to show cause as to why the said expenditure should not be held as a speculation loss and as to why it should not be disallowed for the purpose of computation of normal Business Income. The provision of the Act is clear. If a contract is periodically or ultimately settled otherwise than by the actual delivery of the commodity, then the transaction is to be regarded as a speculative transaction. The proviso to th....
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....s applicable only from 22-05- 2009 and not before it. Therefore the transaction in commodity derivative would be deemed not to a speculative transaction from 22-05-2009. Prior to 22-05-2009, the transaction in commodity derivative would be treated as a speculative transaction. Since the transactions of the assessee have been prior to 22-05-2009, the transaction of the assessee has to be in the nature of Speculative Transaction. Once it is established that the loss, occurring to the assesses is a speculative loss, the provisions of Section 73(l) would be applicable, which states that the loss in Speculation Business can be set off only against profit of another Speculation Business. In the case of the assessee, there is no other Speculative Business and therefore, the assessee would not be entitled to set off this loss against Normal Business income. The deduction of this loss is therefore denied to the assessee. The assessee is however allowed to carry forward the speculation loss to be set off in accordance with the provisions of the Act." 2.1 The matter was carried before the First Appellate Authority wherein various contentions were raised on behalf of the assessee. 3. Hav....
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....er clause (a) of Section 43(5) also and the ground of appeal is, therefore, dismissed. 4. Before us learned AR submitted that ITAT Mumbai 'A' Bench in the case of Assistant Commissioner of Income Tax, Mumbai Vs. Arnav Akshay Mehta as reported in (2012) 25 taxmann.com 252 (Mum.) has held as under: 'By Finance Act, 2005, clause (d) was inserted in the proviso to sub-section (5) of section 43 with effect from 1-4-2006, which provided that an 'eligible transaction in respect of trading in derivative referred to in clause (a) of section (2) of Securities Contract (Regulation) Act, 1956, carried out in a recognized Stock Exchange' shall not be deemed to be speculative transactions. Thus, from 1-4-2006, trading in derivative carried through the recognized Stock Exchange was treated as nonspeculative transactions. For the purpose of clause (d), Rule 6DDA and 6DDB of Income-tax rules, 1962 provided that notification of recognized Stock Exchange has to be done by the Central Govt. (CBDT). In pursuance to this rule, the CBD1 had notified the MCX Stock Exchange Ltd. by S.O. 1327(E) dated 22- 5-2009. [Para 8] Effective date of statute prevails upon procedural mechanism " Thu....
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.... 5. In view of the above, we are of the view that assessee's derivative trading through MCX Stock Exchange in A.Y.2007-08 was non speculated transaction; therefore, loss incurred in such transactions was to be treated as normal business loss. We find that by Finance Act, 2005 Clause (d) was inserted in proviso to sub Section (5) of Section 43 w.e.f. 1.4.2006 which provided that an eligible transaction in respect of trading in derivative referred to in clause (a) of sub Section (2) of Securities Contract (Regulation) Act, 1956 carried out in a recognized Stock Exchange shall not be deemed to be speculative transactions. Thus, from 1st April, 2006 trading in derivative carried through the recognized Stock Exchange was treated as non-speculative transactions. For the purpose of clause (d), Rule 6DDA and 6DDB of IT Rules, 1962, provided that notification of recognized Stock Exchange has to be done by the Central Gove. (CBDT). In pursuance of this Rule, the CBDT has notified the MCX Stock Exchange Ltd. by S.O. 1327(E) dated 22.05.2009. The issue in such a notification given on 22.05.2009, by which MCX Stock Exchange has been recognized, could be held to be applicable for the transactio....