TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1318
X X X X Extracts X X X X
X X X X Extracts X X X X
....ative Trading Account and produced the books of account together with all supporting vouchers and contract notes. 3. BECAUSE the learned Commissioner of Income Tax (Appeals) has failed to appreciate the fact that this issue is already decided by the Hon'ble ITAT in the case of appellant in the A.Y. 2012-13 and 2013-14. 4. BECAUSE as per the definition of 'speculative transaction' given in sub-section 5 of section 43, transaction in respect of 'Derivative Trading ' is specifically excluded from the definition of 'speculative transaction'. 5. BECAUSE the appellant denies for levy of interest under section 234B and 234C of the Income Tax Act, 1961. 6. BECAUSE the order appealed against is contrary to the facts, law and principle of natural justice." 2. The facts of the case are that, the assessee is a Doctor who also indulges in Derivative Trading. During the assessment year in question, the assessee claimed a derivative loss of Rs. 1,57,21,804/- and sought to set off the same against the business profit from medical profession. In justification of his claim, the assessee submitted that the results of derivative trading were verifiable from the bro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowed. The ld. CIT(A) considered the aforesaid precedents and the provisions of section 43(5) to point out that derivative trading was specifically excluded from the definition of, "speculative transaction" when the transaction was carried out electronically, on screen based systems through stock broker or a sub broker, in accordance with the provisions of the security contracts (Regulation) Act, 1956 or the SEBI Act, 1992 or the Depositories Act, 1996 on a recognized stock exchange and was supported by time stamped contract note. However, the ld. CIT(A) noted that in the present assessment year, the assessee had not submitted the time stamped contract notes before the ld. AO. He also noted that in the appeal for the assessment years 2012-13 and 2013-14, the ITAT Allahabad Bench had accepted the plea of the assessee that the income from derivatives was not a speculative transaction on account of the certificates from three recognized stock brokers who had carried out the transactions on behalf of the assessee. However, in the present assessment year, no such certificate has been filed either before the ld. AO or during the appeal proceedings. In view of the same, since the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the scrip wise details of purchase and sale of shares (derivatives) made during the year under consideration. He further pointed out that there was no murmuring in the assessment order that he had not furnished these details and the ld. CIT(A) had derived a wrong presumption regarding the non-filing of brokers statements. It was further submitted that the Department had called for information from all three brokers under section 133(6) of the Income Tax Act, 1961 and therefore, all these details stood furnished before the Department. However, despite these, the assessee had not been allowed the benefit of set off, when there was no doubt about the fact that the loss from derivatives was in the nature of regular business loss. 5. On the other hand, Sh. A.K. Singh, Sr. DR (hereinafter referred to as the 'ld. Sr. DR') questioned the authenticity of the submission made before the ld. AO, particularly paragraphs 10 and 11. It was submitted that the assessee did not submit any material during the assessment proceedings. In fact, it was submitted that in the computation of income, the nature of business had not been mentioned and the loss had been claimed under other income. The ld. Sr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he same in the income tax returns filed by the assessee and the assessee had been asked to reply to the same. In response, the assessee had filed a reply to the same, in which the only annexure was a single page derivative account. He submitted that the assessee was seeking the set off of loss from derivative trading on the basis of audited profit and loss account but he had in fact violated the provisions of section 44AB / Rule 12(2), by not furnishing the audit report in respect of derivative transactions electronically alongwith the audited financials of his medical profession. Moreover, he had taken it to other income. The ld. Sr. DR further pointed out that section 143(2) allowed the assessee to support the return that had been filed with relevant evidences and the assessee had not filed any response to the 143(2), whereby these evidences could have been brought on record. The ld. DR took our attention to the provisions of section 43(5) holding that the said was a deeming provision for speculative transactions and submitted that the transactions in derivative could be held to be business transactions other than speculative transactions only if the conditions laid down in the E....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he main occupation of the assessee was providing medical services therefore, he had not specifically mentioned the details of derivative trading separately in the income tax return filed as the profit and loss in the business of derivative trading was recorded in his capital account with M/s Heartline Cardiac Care Centre. However, the profit and loss from derivative trading was separately shown in the statement showing computation of total income and in the audited statement of account. Therefore, it was submitted that there was no violation on the part of the assessee. Furthermore, it was submitted that the derivative trading account had been separately audited and the net loss had been transferred to the capital account. Therefore, it stood included in the figures reflected in the income tax return. The ld. AR also submitted that there was no option before him to file multiple audit reports and therefore, the annexures were not uploaded. In the circumstances, he prayed that no adverse inference should be taken on account of these technical issues but the overall picture should be seen where the assessee was trading in derivatives in exactly the same manner as he had been trading ....