DATE OF NOTIFICATION OF EXCHANGE ON 25/01/2006 CLARRIFACTORY

[pawansingla]

2010-TIOL-723-ITAT-MUM

IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH 'J', MUMBAI

ITA No.6547/Mum/2009
Assessment Year : 2006-07

PREM ASSOCIATES ADVERTISING & MARKETING
SPAN CENTRE 7th FLOOR, LINKING ROAD
RAMAKRISHNA MISSION MARG
SANTACRUZ (WEST), MUMBAI-400054

Vs

JOINT COMMISSIONER OF INCOME TAX
RANGE-19(2), MUMBAI

R V Easwar, President and Pramod Kumar, AM

Dated : September 17, 2010

Appellant Rep by: Shri Vijay Mehta
Respondent Rep by: Shri Jitendra Yadav

Income Tax - Section 43(5)(d) - Whether the loss incurred by the assessee in 'futures and options' transactions in National Stock Exchange of India or in Bombay Stock Exchange, on a date prior to 25th January 2006 [i.e. the date of their being notified as 'recognized stock exchange'] for the purpose of Section 43(5)(d), can be treated as a transaction covered by the said provision, and, accordingly, excluded from the definition of 'speculative transaction' .

Assessee has incurred loss in respect of 'future and options' transactions entered through National Stock Exchange of India on 17th, 23rd and 24th January 2006, which was claimed to be a normal business loss in view of the exception carved out by insertion of clause (d) of Section 43(5) brought to statute w.e.f 1st April 2006. The claim was rejected by the authorities below on the ground that, as on the date of transactions, the stock exchange was not notified for the purposes of Section 43(5)(d), and, therefore, even though clause (d) came into force with effect from 1st April 2006, the impugned transactions did not satisfy the requirements of Section 43(5)(d) to the effect that transactions should be entered into in a recognized stock exchange. CIT (A) affirmed the order of the AO.

After hearing the parties the ITAT held that,

++ it is undisputed position that the stock exchanges, on which the impugned transactions were carried out, were duly notified on 25th January 2006, and that in accordance with the views of the co-ordinate bench in the case of Anand Buildwell, as also with the views of Hon'ble Gujarat High Court in the case of Claris Lifesciences (supra), once the approval is granted in the relevant previous year, and in the absence of anything indicated to the contrary, the approval has to be taken as effective from the beginning of the relevant year. The issue is thus covered, in favour of the line of reasoning adopted by the assessee, by decision of the coordinate bench in the case of Anand Brothers (supra) and by Hon'ble Gujarat High Court's judgment in the case of Claris Lifesciences (supra). Qe Respectfully following these decisions, we uphold the grievance of the assessee and hold that the derivate transactions, entered into by the assessee at the recognized stock exchanges even prior to the date of notification in the relevant previous year, are to be treated as covered by the exclusion clause set out in Section 43(5)(d).

Assessee's appeal allowed.

ORDER

[pawansingla]

G.KAnand  Bros. Buildwell (P) Ltd v/s Income Tax Officer , 234 SOT 430(Delhi) ,
held that notification dated 24/01/2006 is by way of a subordinated ligislation but cannot override the principal legislation enacted by the Parliament.

[PANKAJ JAIN]

can you please reconfirm the citation.

thanks