TaxTMI 
TaxTMI 
2022 (5) TMI 954
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....imited scrutiny, hence the order passed is liable to be quashed. 3. That the Learned Lower Court erred in facts and legal aspects of the case in not allowing loss incurred in Derivative Business. 4. That the loss in derivative business was non-speculative hence Learned Lower court erred in not allowing the same against other business income. 5. That the order passed is against the merit, circumstances and legal aspects of the case. 2. The Assessing Officer made an addition of Rs.64,98,638/- by invoking the provisions of clause (e) of the first proviso to section 43 (5) of the I.T. Act, holding that derivatives trading in commodities is a kind of speculation in commodity trading business and that loss suffered in derivatives commodity....
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....ed with. It has, accordingly, been prayed that the loss be allowed to be set off against the profits from the medical derivatives business. 5. The Ld. D.R., on the other hand, has placed strong reliance on the impugned order, contending that since the assessee had set off loss of speculative business with regular business, this set off was rightly not allowed by the Assessing Officer and this action of the Assessing Officer was correctly confirmed by the ld. CIT(A). 6. Heard. The issue is as to whether the ld. CIT(A) has correctly confirmed the addition of Rs.64,98,638/-, made by invoking the provisions of clause (e) of the first proviso to section 43(5) of the I.T. Act. 7. Section 43(5) and clause (e) of the first proviso thereto, as ap....
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....(5): (a) Be an eligible transaction (b) In respect of trading (c) In commodity derivatives (d) Carried out in a recognized association (e) Chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013. 10. Let us see if the assessee fulfills all the conditions prescribed by section 43(5) first proviso (e). 11.1 Explanation 2(ii) to clause (e) of the first proviso defines "eligible transaction" as follows: "eligible transaction" means any transaction,- (A) carried out electronically on screen-based systems through member or intermediary, recognized under the bye-laws, rules and regulations of the recognised association for trading in commodity derivative in accordance with the provisions of the Forward ....
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.... transaction tax paid also stood mentioned. Similar was the reply dated 24.10.2019 (APB 17 - 21) filed by the assessee before the ld. CIT(A). The ld. CIT(A), in paragraph 4.2 of the impugned order, has acknowledged that "confirmations of M/s SMC Global Securities Ltd. for derivatives trading in commodity markets, M/s Wealth Mantra Commodities Private Limited for dealing in commodity and currency derivatives have been filed." 11.3 In view of the above, the transactions entered into by the assessee are eligible transactions. 12. It also nowhere stands disputed by the authorities below that the transactions in question were in respect of trading in commodity derivatives, carried out in recognised Association/s, chargeable to commodities tran....
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....2 to section 43(5) specifically states that for the purposes of clause (e) of the first proviso of section 43(5), the expression 'commodity derivatives' shall have the meaning as assigned to it in Chapter VII of the Finance Act, 2013. 14. In the impugned order, the ld. CIT(A), without considering this aspect of the matter, has confirmed the Assessing Officer's observations, holding that the assessee could do two businesses, but the accounts should have been maintained separately; that the assessee has wrongly set off loss of speculative business with regular business; and that the assessee does not have the expertise of doing trading in commodities. 15. Firstly, no case of intermingling of expenses stands made out. The loss from trading i....