2023 (3) TMI 260

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....he Department has taken the following grounds of appeal:- "1. The Ld.CIT(A) has erred in law and on facts in allowing the F&O loss of Rs 3,74,54,163/-as business loss contrary to explanation to Section 73 of the IT Act. 2. The appellant craves leave to amend alter any ground or add a new ground, which may be necessary" 3. The brief facts of the case are that during the year under consideration, the assessee carried transactions in shares, F&O and has earned brokerage income and interest income. The assessee has shown losses of Rs. 3,74,54,163/- from Future and Options (F&O) business, income of Rs. 1,07,51,347/- from share trading and profit of Rs. 6,36,861/- from Mutual Funds. In the assessment, the Assessing Officer re....

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....s. DLF Commercial Developers Pvt. Ltd. has held the loss to be speculative. 2.4. Appellant on the other hand has submitted that it is engaged in the business of share trading and shown loss in trading in derivatives as a business loss in accordance with proviso to section 43(5) of the Act. The appellant has further submitted that business loss shown on trading in derivatives has been conducted on the recognised stock exchange as per proviso (d) to section 43(5). The appellant has contended that the AO has invoked explanation to section 73 and relied upon the case of DLF Com. Dev Pvt. Ltd. in treating the business loss in derivative as a speculation loss. Appellant has submitted that the AO has not considered the fact that Explanati....

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.... loss arising from derivative transactions as 'speculative loss' and has consequently denied set off of such losses from regular income of non-speculative nature etc. by applying Explanation to Section 73 of the Act. 9.2 We first advert to the pivotal contention on behalf of the assessee that Explanation to Section 73 of the Act cannot apply to loss arising from derivative transactions which are categorically excluded from being regarded as speculative business as defined under s.43(5) of the Act read with proviso (d) thereto. Identical issue arose before the Hon'ble Calcutta High Court in the case of Asian Financial Services (supra) relied upon. The Hon'ble Calcutta High Court held that once it is deemed to be a no....

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....assed by ld. CIT(A) allowing relief to the assessee. The ld. Departmental Representative placed reliance on the observations made by the Assessing Officer in the assessment order at para 4.3 of the assessment order. In response, the counsel for the assessee submitted that similar disallowances were made in assessment years 2012-13 and 2013-14 and on the same facts the ITAT, Ahmedabad decided the issue in favour of the assessee for assessment year 2012-13 (ITA No. 770/Ahd/2016 vide order dated 31-10- 2018) and assessment year 2013-14 (ITA No. 624/Ahd/2018 vide order dated 26-06-2019) and accordingly the case of the assessee is squarely covered by the aforesaid orders. The counsel for the assessee further relied upon the Ahmedabad ITAT decisi....