TaxTMI 
TaxTMI 
2020 (7) TMI 665
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....he present Appeal has been filed by the Assessee M/s.Capricorn Food Products India Limited raising the following purported substantial questions of law calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, 'B' Bench, Chennai, dated 27.5.2016 in I.T.A.No.2179/Mds/2015, for the Assessment Year 2008-2009:- "(i) Whether the order of the Tribunal is sustainable in law as it suffers from serious inconsistencies and illegalities? (ii) Whether the Tribunal is right in law in summarily disposing of the appeal without adverting to the detailed submissions made, facts and figures placed before it without applying its mind in a judicious manner? (iii) Whether the Tribunal is rig....
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.... "Clause (d) of Section 43(5) became effective with effect from 1st April, 2006. Therefore, prior to 1st April, 2006 any ransaction in which a contract for the purchase or sale of any commodity including stocks and shares was periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrip was a speculative transaction. Subsection 1 of Section 73 provides as follows: '(1) Any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits and gains, if any, of another speculation business.' The resultant effect was that any loss arising out of speculative transaction could only have been set off against p....
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....n : Where any part of the business of a company (...... ...... ... ........) consist in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares. It would, thus, appear that where an assessee, being the company, besides dealing in other things also deals in purchase and sale of shares of other companies, the assessee shall be deemed to be carrying on a speculation business. The assessee, in the present case, principally is a share broker, as already indicated. The assessee is also in the business of buying and selling of shares for self where actual ....
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....ed the claim made by the assessee, that the assessee was of the opinion that transactions entered into by it were not speculative transactions. ITAT found that the amount involved in the forward contract(FC) was more than 100% of the turnover of the assessee, that FC were not relatable to specific bills, that the assessee had not related any single bill to any of the contract and had not provided any purchase order during the assessment or appellate proceedings. ITAT found that in the case under consideration assessee was not dealing in Foreign Exchange, therefore transactions entered into by it in Foreign Exchange cannot be held to be hedging transactions. As the assessee was dealing in diamonds and FC entered into only for diamonds would ....
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....ng the peculiar facts and circumstances of the case, ITAT confirmed his order FAA and decide effective ground against the assessee." 6. In view of the above orders of the Tribunal, we are of the opinion that the Assessing Officer has to consider the foreign exchange derivative in proportion to export turnover as regular business transaction of the assessee. If the derivative transaction undertaken by the assessee is in excess of export turnover then that loss suffered in respect of that portion of excess transaction has to be considered as speculative loss only and that excess derivative transaction has no proximity with export turnover and the Assessing Officer is directed to compute accordingly. Further, the Assessing Officer has....
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....nsaction and it is to be considered as speculative transaction. In view of the above, we are inclined to remit the issue back to the file of the Assessing Officer for fresh consideration." In view of this, we are remitting the issue in dispute to the file of AO on similar direction. Hence, the appeal of assessee is partly allowed for statistical purposes. 9. In the result, both the appeals of the Revenue and the assessee are partly allowed for statistical purposes. 3. Mr.G.Baskar, learned counsel for the Appellant/Assessee submitted that while remanding the case to the Assessing Authority, the Tribunal has given certain directions and its views about the Exchange Fluctuations to be treated as speculative loss or busines....