Case Law Details
Recently, the Special Bench of the Kolkata Income-tax Appellate Tribunal (the Tribunal) in the case of Shree Capital Services Ltd. Vs. ACIT (2009-TIOL-542-ITAT-KOL-SB) while dealing with a case prior to the amendment to section 43(5) of the Income-tax Act, 1961 (the Act) exempting derivative transaction as speculative in nature, held that the derivative transactions will be considered as speculative transaction under section 43(5) of the Act. Further, it was also held that the above referred amendment to section 43(5) of the Act is perspective in nature and comes into effect from Assessment Year (AY) 2006-07.
Facts of the case:-The taxpayer company was engaged in business of financing and investments in shares and securities. During the year the taxpayer suffered the loss amounting to INR 925,065 on account of futures and options. The Assessing Officer (AO) treated the same as speculation loss as per section 43(5) of the Act.
Contentions of the taxpayer :- The derivative transactions entered into in the form of futures and options were not covered under the provisions of section 43(5) of the Act. Hence, the said transactions cannot be considered as speculative transactions.
Contentions of the tax department
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