2024 (1) TMI 842

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....the Assessment Year 2014-15, whereby the Ld. CIT(A) had partly allowed the appeal of the Assessee against the Assessment Order, dated 30/12/2016, passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 2. The Revenue has raised following grounds of appeal: 1. "Whether Ld.CIT(A) is right in deleting the addition made u/s 43(5) of the Act towards speculative loss without appreciating action of the Assessing Officer. 2. The Ld. CIT(A) has grossly erred in deleting the addition made u/s 43(5) of the Act towards speculative loss. 3. The Ld. CIT(A) has also erred in deleting of total addition of Rs. 3,18,43,201/- as the same was dealt by the AO and ultimately treated the same a....

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....ever, the Assessing Officer was not convinced. The Assessing Officer noted that NSEL operated in the domain of pair trading of commodities, i.e. traders were required to buy on the near contract and sale on the far contract in every commodity. Thus, NSEL operated both spot and future contracts for commodities. The Assessing Officer concluded that the Assessee had undertaken speculative and non-speculative trades but had not maintained separate accounts. Therefore, the Assessing Officer computed the losses arising from speculative transaction by allocating/appropriating receipts and payments to arrive at the figure of INR 3,18,43,201/- as the loss arising from speculative transactions undertaken by the Appellant during the relevant previous ....

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....ection 36(2) of the Act were satisfied. 5.2. Vide order dated 19/01/2023, the CIT(A) decided the issue in favour of the Assessee holding as under: "I have perused the assessment order, grounds of appeal and submission of the Appellant carefully. I find that the during the course of assessment proceedings, the appellant relying on the decision of Hon'ble Supreme Court of India in the case of TRF Ltd vs. CIT (2010) 323 ITR 397 (SC) and relying on CBDT circular 12/2016 dated 30/07/2016 had submitted before the AO that the bad debts arised out of transaction with NSEL are eligible for deduction u/s 36(1)(vii). However the AO had denied the claim of the Appellant. The observation of the AO in para 5.4 of the assessment order is r....

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....39;ble Supreme Court of India in the case of TRF Ltd vs. CIT (2010) 323 ITR 397 (SC) and CBDT circular 12/2016 dated 30/07/2016, I am of the opinion that the AO was not justified in treating the derivative loss as speculation loss. Therefore the derivative loss of Rs. 3,18,43,201/- is treated as business loss. Thus the ground raised by the Appellant is allowed." 6. The Revenue is now in appeal before us challenging the above relief granted by the CIT(A). 7. We have considered the rival submissions and perused the material on record. The facts as emanating from the record are that during the relevant previous year the Assessee undertook trade in commodities on the NSEL through its broker. In the Profit & Loss Account for the relevant p....