Case Law Details
Ms. Edelweiss Capital Ltd. Vs DCIT (ITAT Mumbai)
From the record, we found that assessee was carrying out business of commodity trading on un-recognised exchange and also business of trading in shares. Assessee has claimed set off of loss arising out of trading in shares against the income arising out of trading in commodities. The AO declined set off on the plea that assessee has suffered speculative loss from trading in shares where as assessee was having non-speculative income from trading in commodities. Since, the assessee was doing trading in commodities at unrecognized exchange, the CIT(A) held that income so accrued by trading of commodities at unrecognized exchange is also speculation in nature, therefore, the speculation loss so arose out of trading in share is liable to be set off against the speculative income from trading in commodities. The CIT(A) also discussed the amendment of Section 43(5)(d) which came into force subsequently i.e. 22/05/2009 and which was to provide benefit to the assessee to treat their losses as non-speculative only when such losses were incurred while trading in recognized stock only and not otherwise. In the instant case before us, since assessee was trading at un-recognised stock exchange, therefore, income arising out of trading of commodities at such unrecognized stock exchange also amounts to speculation income, therefore, there is nothing wrong for allowing set off speculation loss against speculation income and for carry forward of unabsorbed speculative loss to be set off against the future speculation income. The AO has not disproved that the commodity trading income was not out of unrecognized commodity exchange market and as long as when the assessee earned out of unrecognized commodity exchange, the income or loss out of transaction on such unrecognized exchange will remain speculative in nature- the amendment in Sec 43(5)(d) was only to provide benefit to the assessees to treat their losses as non speculative only when such losses were incurred while trading on any recognized stock exchange and not otherwise.
In view of decision of Hon’ble Bombay High Court in the case of Bharat Ruia in Income Tax Appeal No.1539/2010 dated 18/04/2011 and Delhi High Court in case of DLF Commercials Ltd., in ITA 94/2013 dated 11/07/2013 the assessee has correctly set off speculation loss on shares against speculative income from trading in commodity and carried forward the unabsorbed speculative loss to the subsequent year to be set of against speculative income.
FULL TEXT OF THE ITAT JUDGMENT
These are cross appeals filed by assessee and revenue against the order of CIT(A)-Mumbai for the A.Y.2007-08 to 2010-11, in the matter of order passed u/s.143(3) / 143(3) r.w.s. 147 of the IT Act.
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