2025 (8) TMI 219

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.... order dated 4.5.2011 passed by the Income Tax Appellate Tribunal, "A" Bench, Kolkata (the Tribunal) in ITA/1033/Kol/2011 for the assessment year 2008-09. The revenue has raised the following substantial questions of law for consideration : "1. Whether on the facts and in the circumstances of the case the learned Tribunal was justified in law in holding that the loss on trading in future and options is business loss of Rs.51.71 crore which can be set off against business income disregarding the explanation below Sec.73 and Circular No.204 dated 24.7.1976 under which such loss has to be treated as speculative loss which cannot be set off against other business income." We have heard Mr. Aryak Dutta, learned senior standing counsel assis....

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....ubmissions were made before the Hon'ble Division Bench in Asian Financial Services Ltd. and the argument of the revenue was rejected. At this juncture, it will be beneficial to refer to the relevant paragraphs of the said judgment. "8. We have not been impressed by the submissions advanced by Mr.Lodh. How can it be said that Sub-section (5) of Section 43 is a general provision and the provision contained in Section 73 is specific in nature? On the contrary, we are inclined to think that the object of Sub-section (5) of section 43 is to define 'speculative business'. 9. Group-D of Chapter-IV of the Income Tax Act consists of Sections 28 to 44DB. When the statute talks of profit, it also talks of losses because loss has been cons....

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....ing business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him; or (b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or 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 Contract....

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.... loss arising out of deemed business against the income arising out of business proper. 12. The learned Tribunal has supported the contention of the revenue relying upon the judgement of the Delhi High Court quoted above. The views expressed by the Hon'ble Delhi High Court are contained in a part of the sentence, which is as follows: "by all accounts the derivatives are based on stocks and shares, which fall squarely within the Explanation to Section 73(4)." 13. We are inclined to think that the clause of the sentence 'which fall squarely...., qualifies the word 'shares 'and not the word 'derivatives'. We have no difficulty in accepting the views of the Delhi High Court when they say that shares fall squarel....