INCOME TAX ACT, 1961

Section 28

Business loss - Business loss or speculation loss - Loss from share transaction -

Assessee derived income from the business of shares sub-brokers, trading in futures and option (F&O) of shares and commodities futures and claimed business loss. AO finding escapement of income of calling upon assessee to justify the set off of loss claimed in the transactions of shares F&O, as claimed. Finding the reply of assessee as not tenable, assessment was completed after making addition of the loss claimed by assessee as speculation loss. Held: Tribunal while considering the appeal of Revenue found that CIT(A) at the time of deciding the appeal of assessee against the addition made by AO treating the same as speculation loss, had called for the remand report to ascertain as to whether the assessee did fulfill the condition laid down under sub-clause (d) of proviso to Sub-section (5) of Section 43. Contract notes were also produced by assessee before CIT(A), amongst which the note issued by a broker through whom assessee had undertaken the alleged transactions in respect of trading in derivatives i.e. F&O of shares was also examined in particular. Revenue had failed to point out that the findings returned by Tribunal. Therefore, loss sustained by assessee from the transaction of purchase and sale of the shares could not be deemed to be speculation loss.

REFERRED : Dy. CIT v. Diamond Securities Pvt. Ltd. [ITA No. 284/Ind/2015, CO No. 49/Ind/2015 Arising out of ITA No. 284/Ind/2015, dt. 5-7-2016].

FAVOUR : In assessee's favour.

A.Y. : 2007-08

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