Shri Dron Sureshkumar Rao Vs. ITO (ITAT Ahemdabad)
F&O business carried out through recognized stock exchange cannot be treated as speculative loss in view of the exceptions carried out under s.43(5) of the Act. As per clause(d) of first proviso to section 43(5) of the Act inserted by the Finance Act, 2005 with effect from 01/04/2006, trading in derivatives carried out through recognized stock exchange will not be deemed to be a speculative transaction for the purposes of section 43(5) of the Act. Thus, the loss arising from trading in derivatives ought to be treated as ordinary business loss. Thus, the restrictions applicable for eligibility of set off of loss of speculative nature will not apply to the loss arising from F&O transaction.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
Assessee is in appeal before the Tribunal against the order of the ld.CIT(A)-II, Baroda dated 18.1.2013 passed for the Asst. Year 2008-09.
2. In the grounds of appeal, assessee has pleaded that the ld.CIT(A) has erred in not allowing set off of loss of Rs. 3,19,071/- being loss on trading of shares/ securities against other business income.
3. Brief facts of the case are that the assessee has started trading activities in shares w.e.f. 14.11.2007. He has filed copy of bank statement and ledger account of M/s. Marfatia Stock Brokings P.Ltd. The ld.AO has treated the loss shown by the assessee as speculative loss and observed that since the assessee has no speculative profit, therefore, he has neither entitled to claim set off nor to claim carry forward.
4. Dissatisfied with this finding of the ld.AO, the assessee carried the matter in appeal and submitted before the ld.CIT(A) the following explanation:
“5.2. SUBMISSION DURING APPELLATE PROCEEDINGS:
5.2.1 In appeal the learned Authorized Representative submitted that –
“As explained, the appellant has, in the course of assessment proceedings, submitted the details of transactions in shares, F&O carried out though the Broker Marfaria Share Brokings Pvt. Ltd, The computation of loss of Rs. 3,19,071/- based on the Profit & Loss Account has been produced in the Assessment order itself and is reproduced below:
