Case Law Details
Ramesh Verma Vs ACIT (ITAT Lucknow)
ITAT held that loss from trading in commodity derivatives is not a speculative loss and rightly been set off by the assessee against regular business profits from medical derivatives business.
Transactions entered into by the assessee, in keeping with the specific requirements of clause (e) of the first proviso to section 43(5), cannot at all be deemed to be speculative transactions. In this regard, unsustainably, the authorities below have gone at a total tangent from the requirements of law. As for the Assessing Officer, he states that the assessee does business in non-agricultural trading, for which, he had not submitted any expertise. Now, this is nowhere the requirement of clause (e) of the first proviso to section 43(5), as discussed above. There is no bar of expertise requiring trading in commodity derivatives, if the assessee, being a Doctor, practices in Radiology. It is also not correct to state, as has been done by the Assessing Officer, that the assessee is trading in commodities rather than in commodity derivatives, which is speculative in nature. As per the details of loss from derivatives business incurred by the assessee, such derivatives were with regard to Crude oil, Nickel, etc., and Currency derivatives. The confirmations from the recognised Associations were filed, as previously noted. Nowhere have the authorities below denied that the commodity derivatives are commodity derivatives as prescribed under Chapter VII of the Finance Act, 2013. In this regard, clause (i) of Explanation 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.
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.
Firstly, no case of intermingling of expenses stands made out. The loss from trading in commodity derivatives has been identified to the last rupee. The issue is as to whether such loss can be set off against other business loss. Next, as discussed herein above, in keeping with clause (e) of the first proviso to section 43(5), the loss incurred is not a speculative loss.
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