M/s K Mohan & Co.(Exports)P Ltd, Bangalore V. Commissioner of Income tax, Bangalore

ITA 1197/BANG/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5568 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-01-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 19-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO
• Keywords: Speculation loss; Assessment record
• Section: 263; 143(3); 14A; 10B; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, BENGALURU BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.1197/BANG/2014 (ASSESSMENT YEAR: 2009-10) M/S. K.MOHAN & CO. (EXPORTS) PVT. LTD. B-162/5, BEGUR ROAD, BOMMANAHALLI, BENGALURU. PAN: AAACL9811H VS. APPELLANT COMMISSIONER OF INCOME-TAX, BENGALURU-1, BENGALURU. RESPONDENT APPELLANT BY : SHRI SURESH MUTHUKRISHNAN, CA. RESPONDENT BY : SHRI C.H.SUNDAR RAO, CIT(DR) DATE OF HEARING : 28/01/2019 DATE OF PRONOUNCEMENT: 31/01/2019 O R D E R PER PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX, BENGALURU-1, BENGALURU, PASSED U/S 263 OF THE INCOME-TAX ACT,1961 ['THE ACT'] DATE D 12/03/2014 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. THE ORDER PASSED BY THE LEARNED C.I.T. U/S 263 OF THE ACT, IN SO FAR AS IT IS AGAINST THE APPELLANT, IS OPPOSED T O LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUM STANCES OF THE CASE. ITA NO.1197/BANG/2014 PAGE 2 OF 10 2. THE LEARNED C.I.T. FAILED TO APPRECIATE THAT THERE WAS NO ERROR MUCH LESS AN ERROR PREJUDICIAL TO THE INTEREST OF T HE REVENUE IN THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER W ARRANTING REVISION U/S.263 OF THE ACT AND CONSEQUENTLY, THE O RDER PASSED BY THE C.I.T. IS OPPOSED TO LAW AND FACTS OF THE AP PELLANT'S CASE AND REQUIRES TO BE CANCELLED. 3. THE LEARNED C.I.T. FAILED TO APPRECIATE THAT THERE WAS NO REQUIREMENT TO SET-ASIDE THE ISSUE RELATING TO THE LOSS SUSTAINED BY THE APPELLANT FOR FRESH CONSIDERATION AS THE LEA RNED A.O. HAD EXAMINED THE ISSUE IN COURSE OF ASSESSMENT PROCEEDI NGS AND THEREFORE THE PROVISIONS OF SECTION 263 OF THE ACT WERE INAPPLICABLE TO THE FACTS OF THE APPELLANT'S CASE. 4. THE LEARNED C.I.T. FAILED TO APPRECIATE THAT THE LO SS SUSTAINED BY THE APPELLANT ON HEDGING OF FOREIGN CURRENCY EXC HANGE LOSS CANNOT BE CONSIDERED AS A SPECULATIVE LOSS AS THE S AME WAS INCURRED IN NORMAL COURSE OF BUSINESS OF EXPORTS CA RRIED ON BY THE APPELLANT AND AS SUCH, THERE WAS NO REQUIREMENT TO CONSIDER THE SAME AS A SPECULATION LOSS UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND THUS, THE RE WAS NO ERROR PREJUDICIAL TO THE INTEREST OF REVENUE FOR IN VOKING THE PROVISIONS OF SEC. 263 OF THE ACT. 5. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRA YS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEE AS PART OF TH E COSTS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURE OF GARMENTS AND FILED THE R ETURN OF INCOME ON 28/09/2009 WITH NIL INCOME. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 14 2(1) OF THE ACT WERE ISSUED. THE LEARNED AR APPEARED FROM TO TIME AND THE CASE WAS DISCUSSED. THE AO, ON PERUSAL OF THE FINANCIAL STATEMENTS AND BALANCE-SHEET FOUND THAT THE ASSESSEE HAS MADE INVESTMENTS ITA NO.1197/BANG/2014 PAGE 3 OF 10 AND EARNED DIVIDEND INCOME AND THE AO APPLIED THE P ROVISIONS OF SECTION 14A OF THE ACT AND WORKED OUT THE DISALLOWA NCE OF RS.14,09,724/- AND ASSESSED LOSS TO THE EXTENT OF RS.16,04,00,292/- AND PASSED ORDER U/S 143(3) OF TH E ACT DATED 22/12/2011. 4. MEANWHILE, THE CIT HAVING JURISDICTION, ON PERUS AL OF RECORDS FOUND THE ASSESSMENT ORDER PASSED U/S 143(3 ) AND IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. THE CIT FOUND THAT THE ASSESSEE HAS CLAIMED EXPENDITURE IN THE P&L ACCOUNT OF RS.2,02,41,206/- UNDER THE HEAD LOSS ON FORWARD CONTRACTS. THE CIT IS OF THE OPINION THAT LOSS IS IN THE NATURE OF SPECULATION AND CANNOT BE SET OFF AGAINST REGULAR I NCOME AS THE LOSS HAS TO BE ADDED TO THE INCOME. SINCE THE AO HA S NOT DEALT ON THIS ISSUE AND EXAMINED IN THE ASSESSMENT PROCEE DINGS, THE CIT ISSUED NOTICE AND THE ASSESSEE FILED WRITTEN SU BMISSIONS ON27/11/2013 AND 28/11/2013. THE CIT, AT PAGE 2 OF THE ORDER, DEALT ON THE SUBMISSIONS OF THE ASSESSEE, WHERE THE ASSESSEE WAS RELYING ON THE JUDICIAL DECISIONS. THE LD. CIT AFT ER CONSIDERING THE SUBMISSIONS THAT LOSS UNDER FORWARD CONTRACTS CAN NOT BE CONSIDERED AS SPECULATION LOSS. WHEREAS ON PERUSAL OF ASSESSMENT RECORDS, THE CIT FOUND THAT THE AO HAS NOT EXAMINED THE NATURE OF LOSS, WHETHER IT IS SPECULATION OR NON-SPECULATI ON. THE CIT RELIED ON THE HONBLE APEX COURT DECISION IN THE CA SE OF MALABAR ITA NO.1197/BANG/2014 PAGE 4 OF 10 INDUSTRIAL CO. VS. CIT (243 ITR 83) AND THE CIT REFERRED TO THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 WHERE INCOME F ROM FORWARD CONTRACTS HAS BEEN TREATED AS SPECULATIVE I N NATURE FOR THE PURPOSE OF ALLOWING DEDUCTION U/S 10B. THEREFO RE, THE CIT IS OF THE OPINION THAT LOSS FROM FORWARD CONTRACTS H AS TO BE CONSIDERED AS SPECULATION IN NATURE AND THE ASSESSE E HAVING ACCEPTED THE DECISION OF THE TRIBUNAL, HAS NOT CONT ESTED IN THE HIGHER FORUMS. THE LD.CIT, WITH THESE OBSERVATIONS OF THE OPINION THAT THE ORDER PASSED U/S 143(3) DATED 22/12/2011 I S ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE AND SET ASIDE THE ASSESSMENT, TO THE FILE OF THE AO TO EXAMINE THE NA TURE OF LOSS ON FORWARD CONTRACTS AS SPECULATION AND REDO THE ASSES SMENT AND ALSO THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPO RTUNITY AND PASSED ORDER U/S 263 OF THE ACT DATED 12/03/2014. 5. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN AP PEAL BEFORE THE TRIBUNAL. BEFORE US, THE LEARNED AR ARGUED THA T THE CIT, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AT PAGE 3 HAS EMPHASIZED ON THE FACTS THAT THE DECISION OF THE TR IBUNAL FOR ASSESSMENT YEAR 2005-06 WAS IN RESPECT OF CLAIM OF 10B DEDUCTION WHEREAS THE INCOME FROM FORWARD CONTRACTS WAS CONSIDERED AS SPECULATION. BUT IN THE PRESENT CASE, THE ASSESSEE HAS DEBITED TO THE P&L ACCOUNT, LOSS ON FORWARD CON TRACTS AND NOT ITA NO.1197/BANG/2014 PAGE 5 OF 10 FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 10B OF TH E ACT. THE LEARNED AR REFERRED TO LETTER FILED BEFORE THE AO D ATED 25/11/2011 WITH NOTE ON LOSS ON FORWARD CONTRACT, WHICH IS PLA CED AT PAGE 4 OF THE PAPER BOOK. WHEREAS THE AO, IN THE ASSESSME NT PROCEEDINGS, HAS CALLED FOR DETAILS WHICH ARE FILED IN PAPER BOOK AT PAGES 4 AND THE AO HAS EXAMINED THE FACT ON ISSU ES. THE LEARNED AR RELIED ON THE FOLLOWING DECISIONS: 1. MOIL LTD. VS. CIT (81 TAXMANN.COM 420(BOM); 2. CIT VS. NIRAV MODI (71 TAXMANN.COM 272(BOM); 3. SPECTRA SHARES & SCRIPS (P) LTD. VS. CIT (219 TAXMAN 61(AP); 4. CIT VS. BADRIDAS GAURIDU (P) LTD. (134 TAXMAN 376)(BOM); 5. CIT VS. FRIENDS AND FRIENDS SHIPPING (P) LTD. (35 TAXMANN.COM 553(GUJ); 6. K.MOHAN & CO. (EXPORTS) PVT. LTD. VS. ACIT , IN ITA NOS.1093/BANG/2009, 1266/BANG/2010 & 1057/BANG/ 2012 (ITAT, BANG.) 7. ACIT VS. K.MOHAN & CO. (EXPORTS) PVT. LTD. VS. ACIT , IN ITA NO.113/BANG/2019 (ITAT, BANG) AND 8. HANUMAN WEAVING FACTORY VS. ACIT IN ITA NO.112/BANG/2012 & 1320/BANG/2012(ITAT, BANG.) FURTHER LEARNED AR SUBMITTED COPY OF THE ASSESSMENT ORDERS FOR THE EARLIER YEARS AND CONSEQUENTIAL ORDER PASSED U/ S 143(3) R.W.S 263 OF THE ACT WHICH IS PLACED AT PAGE 45 OF THE PA PER BOOK AND SUPPORTED WITH JUDICIAL DECISIONS IN THE CASE OF MAJESTIC EXPORTS VS. JCIT (62 TAXMANN.COM 307)(CHENNAI-TRIB). THE LD. AR MENTIONED THAT THE ASSESSEE IN THE PRESENT CASE IS IN THE BUSINESS OF MANUFACTURE OF COTTON TEXTILES AND FORWARD CONTR ACTS WAS IN RESPECT OF SAME GOODS AND NOT ANY OTHER GOODS AND P RAYED FOR ALLOWING THE APPEAL. ITA NO.1197/BANG/2014 PAGE 6 OF 10 6. CONTRA, LEARNED DR SUPPORTED THE ORDER OF THE C IT AND REFERRED THAT THE CIT HAS CORRECTLY CONSIDERED THIS FACT AND THE AO HAS NOT VERIFIED THE LOSS ON FORWARD CONTRACT AND E MPHASIZED ON PARA. 21 OF THE ORDER OF THE TRIBUNAL IN THE ASSESS EES OWN CASE FOR ASSESSMENT YEAR 2005-06 IN ITA NO.113/2009 DATE D 07/08/2009, WHICH READS AS UNDER: 21. IT IS TRUE THAT SECTION 10B(1) SAYS THAT A D EDUCTION OF SUCH PROFIT AND GAINS AS ARE DERIVED BY 100% EXPORT ORIENTED UNDERTAKING IS TO BE ALLOWED AS DEDUCTION. FOR THE PURPOSES OF SUB-SECTION (1), THE QUANTUM OF DEDUCTI ON IS TO BE COMPUTED AS PER SECTION 108(4). THE DEDUCTION PERMISSIBLE IS IN THE SAME PROPORTION TO THE PROFIT OF THE BUSINESS OF THE UNDERTAKING AS IT BEARS TO THE EXPO RT TURNOVER TO THE TOTAL TURNOVER. THE WORDS USES ARE 'PROFIT OF THE BUSINESS OF THE UNDERTAKING'. THE BUSINESS OF T HE UNDERTAKING IS TO MANUFACTURE AND EXPORT READYMADE GARMENTS. WE HAD ALREADY HELD THAT PROFIT FROM FORW ARD CONTRACT IS PROFIT TO BE ASSESSED UNDER THE HEAD 'SPECULATION BUSINESS' AND SPECULATION BUSINESS IS NOT THE BUSINESS OF THE UNDERTAKING. HENCE FOR THE PURP OSE OF COMPUTING DEDUCTION U/S 10B, SPECULATION BUSINESS C ANNOT BE CONSIDERED AS THE BUSINESS OF THE UNDERTAKING. W E HAVE ALSO CONSIDERED THE DECISION OF THE JURISDICTIONAL BENCH ON WHICH THE LEARNED AR HAS PLACED RELIANCE. THE FACTS IN THAT CASE ARE DIFFERENT, AS IN THAT CASE, THE ISSUE WAS IN RESPECT OF INTEREST AND NOT PROFIT FROM OTHER BUSINESS. HENCE, THE RATIO OF LAW AS LAID DOWN BY THE JURISDICTIONAL BENCH IN THE CASE OF MOTOROLA INDIA (SUPRA) IS NOT APPLICABLE. AND PRAYED THAT THE APPEAL OF THE ASSESSEE BE DISMI SSED. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED MATE RIAL ON RECORD. THE SOLE CRUX OF THE DISPUTED ISSUE IS WIT H RESPECT TO ORDER PASSED U/S 143(3) IS ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF ITA NO.1197/BANG/2014 PAGE 7 OF 10 REVENUE. THE LEARNED AR EMPHASIZED THAT IN THE SCR UTINY PROCEEDINGS, AO HAS CALLED FOR INFORMATION ON VARIO US DATES AND THE ASSESSEE FILED LETTER WITH NOTE ON LOSS ON FORW ARD CONTRACTS DATED 25/11/2011 AND SECOND LETTER ON THE SAID DATE WAS FILED ON THIS DISPUTED ISSUE. THE LEARNED AR S CONTENTION THAT THE TRIBUNAL, IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2005-06 WHICH WAS REFERRED BY THE CIT IN PARA.4.4 OF THE RE VISION ORDER, WAS IN RESPECT OF FORWARD CONTRACT TREATED AS SPECU LATIVE TRANSACTION FOR THE PURPOSE OF CLAIMING DEDUCTION U /S 10B OF THE ACT AS SUCH SPECULATION NATURE OF TRANSACTION ARE N OT ELIGIBLE FOR DEDUCTION U/S 10B. IN THE PRESENT CASE, THE ASSESSE E HAS CLAIMED THE LOSS ON FORWARD CONTRACT IN P&L ACCOUNT. THERE FORE, THE DECISION OF THE TRIBUNAL IN PARTICULAR TO FORWARD C ONTRACT WAS TREATED AS SPECULATIVE IN NATURE FOR THE PURPOSE OF BENEFIT U/S10B OF THE ACT WHERE AS IN THE CASE ON HAND, THE ASSESS EE HAS CLAIMED THE LOSS ON FORWARD CONTRACTS IN P&L ACCOUNT AND NO T WITH RESPECT TO CLAIM U/S 10B. WHEN A QUERY WAS RAISED WHETHER THE CONSEQUENTIAL ORDER PASSED AS PER THE DIRECTION OF THE CIT, THE LEARNED AR FILED COPY OF THE ASSESSMENT ORDER PASSE D U/S 143(3) R.W.S. 263 OF THE ACT DATED 16/10/2014 WHERE THE AO , HAS FOLLOWED THE DIRECTIONS AND MADE ADDITION. 8. NOW, THE QUESTION THAT ARISES BEFORE US IS THA T THE ORDER U/ S 263 SATISFIES THE TWIN CONDITIONS OF BEING ERR ONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THE LEARN ED AR FILED ITA NO.1197/BANG/2014 PAGE 8 OF 10 ASSESSMENT ORDERS U/S 143(3) FOR ASSESSMENT YEARS 2 005-06, 2007-08 AND 2008-09 WHERE THERE WAS NO ADDITION TO THIS EFFECT AND SIMILAR LOSS ON FORWARD CONTRACTS WAS CLAIMED I N THE PRESENT ASSESSMENT YEAR. WE FOUND THE ASSESSEE HAS ENTERE D INTO FORWARD CONTRACTS IN RESPECT OF PRODUCTS DEALT BY I T AND NOT ANY OTHER EXPORTED GOODS AND THE LOSS ON SUCH TRANSACTI ONS HAS TO BE ALLOWED AS BUSINESS LOSS. THE LEARNED AR RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF MAJESTIC EXPORTS (SUPRA) WHERE THESE FACTS HAVE BEEN CONSIDERED BY THE TRIBU NAL AT PARA.8.1 WHICH READ AS UNDER: 8.1 NOW, THIS VIEW HAS BEEN TAKEN BY CO-ORDINATE, CHEN NAI IN THE CASE AISHWARYA & CO. (P.) LTD. [IT APPEAL NO. 860 (MAD.) OF 2014, DATED 29-5-2015], WHEREIN THEY FOLLOWED THE JUDGMEN T OF THE CALCUTTA HIGH COURT IN THE CASE OF DY. CIT V. BALJIT SECURITIES (P.) LTD. [2015] 68 SOT 82 (URO)/55 TAXMANN.COM 191 WHEREIN H ELD AS UNDER: '(1) ANY LOSS, COMPUTED IN RESPECT OF A SPECULATION BUSINESS CARRIED ON BY THE ASSESSEE, SHALL NOT BE SET OFF EXCEPT AGA INST PROFITS AND GAINS, IF ANY, OF ANOTHER SPECULATION BUSINESS.' THE RESULTANT EFFECT WAS THAT ANY LOSS ARISING OUT OF SPECULATIVE TRANSACTION COULD ONLY HAVE BEEN SET OFF AGAINST PR OFITS ARISING OUT OF SPECULATIVE TRANSACTION. IN THE PRESENT CASE, TH E ASSESSEE, AS ALREADY INDICATED, HAS BEEN DEALING IN SHARES WHERE DELIVERY WAS IN FACT TAKEN AND ALSO IN SHARES WHERE DELIVERY WAS NO T ULTIMATELY TAKEN. IN OTHER WORDS, THE ASSESSEE HAS BEEN DEALIN G IN ACTUAL SELLING AND BUYING OF SHARES AS ALSO DEALING IN SHARES ONLY FOR THE PURPOSE OF SETTLING THE TRANSACTION OTHERWISE THAN BY ACTUA L DELIVERY. THE QUESTION ARISE WHETHER THE LOSSES ARISING OUT OF TH E DEALINGS AND TRANSACTION IN WHICH THE ASSESSEE DID NOT ULTIMATEL Y TAKE DELIVERY OF THE SHARES OR GIVE DELIVERY OF THE SHARES COULD BE SET OFF AGAINST THE INCOME ARISING OUT OF THE DEALINGS AND TRANSACTIONS IN ACTUAL BUYING AND SELLING OF SHARES. AN ANSWER TO THIS QUESTION I S TO BE FOUND IN THE EXPLANATION APPENDED TO SECTION 73 WHICH READS AS FOLLOWS: 'EXPLANATION: WHERE ANY PART OF THE BUSINESS OF A C OMPANY OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MA INLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS 'INTEREST ON SE CURITIES', OR A ITA NO.1197/BANG/2014 PAGE 9 OF 10 COMPANY THE PRINCIPAL BUSINESS OF WHICH IS THE BUSI NESS OF BANKING OR THE GRANTING OF LOANS AND ADVANCES) CONSISTS IN THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHA LL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSIS TS OF THE PURCHASE. IN ORDER TO RESOLVE THE ISSUE BEFORE US, THE SECTIO N HAS TO BE READ IN THE MANNER AS FOLLOWS: 'EXPLANATION : WHERE ANY PART OF THE BUSINESS OF A COMPANY (. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) CONSIST IN THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULA TION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PU RCHASE AND SALE OF SUCH SHARES.' IT WOULD, THUS, APPEAR THAT WHERE AN ASSESSEE, BEIN G THE COMPANY, BESIDES DEALING IN OTHER THINGS ALSO DEALS IN PURCH ASE AND SALE OF SHARES OF OTHER COMPANIES, THE ASSESSEE SHALL BE DE EMED TO BE CARRYING ON A SPECULATION BUSINESS. THE ASSESSEE, I N THE PRESENT CASE, PRINCIPALLY IS A SHARE BROKER, AS ALREADY IND ICATED. THE ASSESSEE IS ALSO IN THE BUSINESS OF BUYING AND SELL ING OF SHARES FOR SELF WHERE ACTUAL DELIVERY IS TAKEN AND GIVEN AND A LSO IN BUYING AND SELLING OF SHARES WHERE ACTUAL DELIVERY WAS NOT INT ENDED TO BE TAKEN OR GIVEN. THEREFORE, THE ENTIRE TRANSACTION CARRIED OUT BY THE ASSESSEE, INDICATED ABOVE, WAS WITHIN THE UMBRELLA OF SPECULATIVE TRANSACTION. THERE WAS, AS SUCH, NO BAR IN SETTING OFF THE LOSS ARISING OUT OF DERIVATIVES FROM THE INCOME ARISING OUT OF B UYING AND SELLING OF SHARES. THIS IS WHAT THE LEARNED TRIBUNAL HAS DO NE. 9. FROM THE ABOVE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF BALJIT SECURITIES (P.) LTD . ( SUPRA ), THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE. HOWEVER, WE MAKE IT CLEAR T HAT TOTAL TRANSACTION CONSIDERED FOR DETERMINING THIS BUSINES S LOSS FROM DERIVATIVE TRANSACTIONS CANNOT BE MORE THAN THE TOT AL EXPORT TURNOVER OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSI DERATION AND IF THE DERIVATIVE TRANSACTION IS IN EXCESS OF EXPORT T URNOVER, THEN THAT LOSS SUFFERED IN RESPECT OF THAT PORTION OF EXCESS TRANSACTIONS TO BE CONSIDERED AS SPECULATIVE LOSS ONLY AS THAT EXCESS DERIVATIVE TRANSACTION HAS NO PROXIMITY WITH EXPORT TURNOVER A ND THE ASSESSING OFFICER IS DIRECTED TO COMPUTE ACCORDINGLY. THIS GR OUND IS ALLOWED AS INDICATED ABOVE. 9. WE FOUND THE DECISION OF THE TRIBUNAL, WHER E FACTS ARE SIMILAR TO THE PRESENT CASE BUT NEEDS VERIFICATION OF ASSESSEES CASE IN PARTICULAR TO THE CLAIM OF LOSS MADE BY THE ASSESSEE AND SUCH FORWARD CONTRACTS LOSS CANNOT BE MORE THAN EXP ORT TOTAL TURNOVER OF THE ASSESSEE AND THERE IS NO FINDING ON THIS DISPUTED ITA NO.1197/BANG/2014 PAGE 10 OF 10 ISSUE BY THE AO NOR THE ASSESSEE COULD SUBSTANTIATE OR EXPLAIN BEFORE LOWER AUTHORITIES. WE ARE OF THE SUBSTANT IVE OPINION THAT MATTER REQUIRES VERIFICATION AND FOR LIMITED PURPOS E, REMIT THE DISPUTED ISSUE TO THE FILE OF THE AO TO APPLY RATIO OF THAT DECISION AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST JANUARY, 2019. SD/- SD/- ( CHANDRA POOJARI ) ( PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BENGALURU D A T E : 31/01/2019. SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)- 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE