The Ahmedabad bench of Income Tax Appellate Tribunal recently ruled that the future and option transaction carried out through recognized stock exchange cannot be treated as speculative transaction, can be set off against ordinary business income.
Judicial member Shri. Rajpal Yadav held so while allowing the appeal of assesse. The assesse raised the ground of appeal that 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.
The assesse in the instant case has started trading activities in shares, filed a copy of bank statement and ledger account of M/s.Marfatia Stock Brokings P.Ltd wherein AO held that 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.
Dissatisfied with this finding of the AO, the assessee carried the matter in appeal before the CIT (A).
On appeal, the CIT (A) and confirmed the order of the AO.
Aggrieved, assessee went in appeal before the tribunal challenging the order of lower authority. The counsel for the assessee submits that loss from F&O carried out through recognized stock exchange cannot be treated as speculative transaction.
After considering the arguments from both sides and identical case laws, the judicial member found that in the assessment order, the AO has observed that return was filed on 4.6.2008 and not 4.8.2008. it was noted that the second aspect is whether the loss from F&O could be considered as speculative loss, has been considered by the Tribunal in the case of Babubhai Ramanlal Patel (supra).
In that case, it was found that the loss from F&O business carried out through recognized stock exchange cannot be treated as speculative loss in view of the exceptions carried out under section 43(5) of the Income Tax Act. Thus the loss arising out from the trading in derivatives must be considered as ordinary business loss, the Member said.
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