Held, the Tribunal reversed the CIT (A) decision holding that Special Bench Kolkata in the case of Shree Capital Services Ltd., 121 ITD 498 (Kol) held that amendment in Section 43(5) clause (d) w.e.f 01.04.2006 referred to in CIT Vs. SSKI Investors Pvt. Ltd. is not clarificatory and therefore not retrospective in operation.
As regards applicability of Circular No. 23, dated 12.09.1960 relied on by Assessing Office and its applicability denied by Assessee, the Court held the value and volume of a dealer or investor holding hedging transactions should be in equal proportion and hedging transactions can never be in excess. It is further a condition that hedging transaction should be in respect of very same script held by an Assessee as inventory in the business of stocks and shares. In the present case, the Assessing Officer has not gone by script-wise tally but has gone by value of overall inventory. To this extent, the Assessing Officer has been very reasonable. Therefore said Circular was very much relevant and applicable in the case of the Assessee.
However with regard to the plea of the Assessee that to the extent of the value of inventory held by the Assessee on a particular day, the loss in purchase of Nifty Futures should not be considered as speculative while working out the loss was accepted. To that extent, plea of the Assessee was accepted and the Assessing Officer was directed to work out speculation loss by taking excess of the Assessee's position in forward market over actual stock in ready market and to work out the speculative loss proportionately.
