Chowdry Associates

[2020] 117 taxmann.com 840 (Delhi – Trib.)

 

The Tribunal concluded as under

 

“Where assessee was in business of commodity derivatives and revenue had also accepted income from transactions of assessee as business income and not as income from speculation for all earlier years, if owing to suspension of operations by NSEL, assessee could not recover amounts from brokers which were advanced for purchase of commodities, such loss was allowable under section 28”

 

 Short Overview of the Case:

 

– Section 28(i), read with section 43 of the Income-tax Act, 1961

 

– Business loss/deductions

 

– Allowable as (Commodity transaction) – Assessment year 2015-16

 

– Whether sub-section (e) of section 43(5) which was introduced by Finance Act, 2013 w.e.f. 1-4-2014 reveals that trading and commodity derivatives carried out in a recognized association shall not be a speculative transaction

 

– Held, yes

 

– Assessee had been dealing in trading on NSEL platform and treated receipts as income from business which had been accepted by revenue in earlier years

 

– In current year, assessee purchased through two Commodities brokers

 

– NSEL failed to fulfill its commitments and ultimately Government had prohibited NSEL to make any transactions after 1-7-2013

 

– Owing to suspension of operations by NSEL, assessee could not recover amounts from both brokers which was given as a part of business transaction for purchase of commodities in conduct of regular business operations

 

– Assessing Officer disallowed losses as claimed by assessee on ground that transactions carried out by assessee were speculative transactions settled without delivery in terms of section 43(5)

 

– Whether since assessee was in business of commodity derivatives and revenue had also accepted income from transactions of assessee as business income and not as income from speculation for all earlier years, business loss as claimed by assessee was allowable under section 28

– Held, yes

 

– ITAT slams AO for not allowing benefit of Sec. 43(5)(e).