TaxTMI 
TaxTMI 
2016 (7) TMI 1566
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....dition of Rs. 96,50,334/- made by the Assessing Officer on account of set off of loss claimed in transactions of shares F&O of Rs. 96,50,334/-. 2. Brief facts of the case are that the assessee firm derives income from business of shares broker, trading in futures & options (F&O) of shares and commodities future. The assessee in the return of income filed claimed business loss of Rs. 96,50,334/- on the trading of F&O of shares. According to the Assessing Officer in these transactions actual delivery of scripts was not involved, the Assessing Officer held that the loss claimed by the assessee was speculation loss. He also held that the transaction of the assessee was not an eligible transaction under clause (d) section 43(5) of the Act and....
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....l the contract notes before the Assessing Officer whereas the assessee contended that all the contract notes were produced before the Assessing Officer. Therefore, the copy of written submissions along with sample copy of contract notes were forwarded to the Assessing Officer with the request to verify the same and submit remand report as to whether the assessee fulfils the condition laid down under clause (d) to section 43(5) of the Act and submit a report regarding the merit of disallowance made by the Assessing Officer in the assessment order by treating the loss of Rs. 96,50,334/- as speculation loss. 5. The remand report furnished by the Assessing Officer vide File No. DCIT-1(1)/Bhopal/Remand Report/14-15 dt.23.2.2015 through the Ad....
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....peculation loss' may be deleted. 6. The learned CIT(A) after considering the submissions of the assessee as well as the remand report held as under :- "3.7 I have carefully considered the submission of the appellant, Remand Report of the A.O., Rejoinder of the appellant and facts of the case. The issue involved is whether the loss of Rs. 96,50,334/- incurred by the appellant in the trading of derivatives (F&O) in shares was a business loss or speculation loss. As per the appellant, the transactions undertaken by the appellant relating to trading of derivatives (F&O) in shares were 'eligible transactions' in view of Claude (d) of the Proviso to section 43(5) of the Act and, therefore, the loss so incurred shall not be deemed to a....
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....arbitrage to guard against loss which may arise in the ordinary course of his business as such member; or (d) an eligible transaction in respect of trading in derivatives referred to in clause(ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange; or (e) an eligible transaction in respect of trading in commodity derivatives carried out in a recognised association shall not be deemed to be a speculative transaction. Explanation 1.-For the purposes of clause (d), the expressions- (i) "eligible transaction" means any transaction,- (A) carried out electronically on screen-based systems through a stock broker or sub-b....
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....ation transaction if it fulfils the following conditions: - (i) The transaction is carried out electronically on screen-based system through a stock broker or subbroker;. (ii) The transaction is supported by a time stamped contract note issued by such stock broker; and (iii) In contract note, the Unique Client Identity No. allotted and PAN of the client is clearly indicated. It may be noted that the appellant had produced all the contract notes before the Assessing Officer during assessment proceedings showing that all the transactions were undertaken through stock broker, M/s Arihant Capital Market Ltd. Now, in order to examine whether the transactions undertaken by the appellant in respect of trading in....
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....A.O. is directed to treat the loss of Rs. 96,50,334/- incurred in trading of derivatives (F&O) in shares as 'business loss.' Therefore, the addition of Rs. 96,50,334/- made the A.O. into the returned income on account of treating the same as speculation loss is deleted. Hence, this ground is allowed." 7. Before us, the learned DR submitted that there was a confusion in this case as in the assessment order it is mentioned that the assessee has set off the loss from shares F&O of Rs. 96,50,334/- against its business income and it was, therefore, presumed that it was brought forward business loss of earlier year and, hence, not allowable. It was, therefore, held that as the provisions of section 45(5)(d) of the Act were introduced w.e.f. 1.....