2010 (7) TMI 1021

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....ive transaction as speculation loss." 2. On perusal of P/L Account and other details, the A.O. found that the assessee claimed loss of Rs. 1,63,718/- on derivative transaction, which was adjusted against the income from business by directly debiting in P/L Account. According to the A.O., as per Notification No.2 dated 25/1/2006, the derivative transaction upto 24/1/2006 is to be considered as 'speculation business' and from 25/1/2006 to 31/3/2006 the said transaction is to be considered as 'business other than speculation', which the assessee did not do while drawing P/L Account. From the details filed in respect of derivative sales, the A.O. found that there was a loss of Rs. 2,22,296/- upto 24/1/2006 and there was a profit of Rs. 58,57....

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....e Special Bench decision of I.T.A.T. in the case of Shree Capital Services Ltd. vs. ACIT, reported in 318 ITR (AT)1 (Kol-SB), the Tribunal treated the loss incurred by the assessee on derivative transaction as business loss. The finding of the Tribunal in the said case is as under :- "Section 43(5) defines 'speculative transaction' which 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 ....