Case Law Details
ITO Vs. M/s. Arandi Investments Pvt. Ltd. (ITAT Mumbai)
Assessing Officer treated loss in future and options (F&O) transactions as speculation loss and disallowed the same.
We find that on this issue, the A.O. has referred to Honorable Delhi High Court decisions on identical issue. The Honorable Delhi High Court in the case of CIT vs. DLF Commercial Developers Ltd. [2013] 218 Taxman 45 (Del) has held that the provisions of the explanation to section 73 supersede the provision of section 43(5)(d).
In view of this, the loss arising on account of F & O transaction was to be held as a speculation loss by applying the provisions of explanation to section 73.
We also note that to cure this situation and enable such derivative dealings to be taken out of the ambit of explanation to section 73, the amendment was done in Explanation 73 by which companies engaged in business of trading in shares were also taken out the ambit of aforesaid explanation. However, this amendment was done with effect from 01.14.2015. the Honorable Calcutta High Court in the case of Pr. CIT vs. M/s. Snowtex Investment Ltd. (GA No. 1695 of 2016 ITAT No. 199 of 2016 vide order dated 22.11.2016) has held that the said amendment is prospective. Hence, the aforesaid amendment does not help the case of the assessee. The assessee’s case is squarely covered by the aforesaid Honorable Delhi High Court decision. It is settled law that the decision of Honorable High Court is superior to that of ITAT. Hence, in our considered opinion, the order of the ld. Commissioner of Income Tax (Appeals) in this case deserves to be set aside and the order of the Assessing Officer be restored. Accordingly, we restore the order of the Assessing Officer on this issue.
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