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The derivatives include foreign currency and call option/put option, are transaction of derivative markets and cannot be termed as speculative in nature.

Shanti Prime Publication Pvt. Ltd.

Sec. 263 of Income Tax Act, 1961— Revision — Revision proceedings invalid as order passed by AO was not erroneous and prejudicial to the interests of revenue.

Facts: Assessee went on appeal before Tribunal and raised the grounds that proceedings and order u/s 263 of the IT Act 1961 was not valid as per law was bad in law and was passed was in violation of principals of natural justice hence is bad in law and be quashed and or set aside.

Held, that the assessee proved that MCA Stock Exchange Ltd was notified for the purpose of section 43(5) vide Notification No. 46/2009 dated 22.05.2009 issued by the CBDT and the currency derivative transaction was done by assessee through broker i.e M/s Godavari Exim Pvt Ltd; who was member of MCA Stock Exchange Ltd. The assessee's transaction falls under clause (d) of sub-section 5 of section 43 and therefore currency derivative loss Rs. 41,25,364/- is not a speculation loss. Based on the factual position, the assessment order,u/s 143(3) which is subjected to impugned revision proceedings, thus could not be held to be erroneous and prejudicial to the interest of the revenue. Accordingly, we quash the impugned revision proceedings, and set aside learned Commissioner's order.[2020] 26 ITCD Online 054 (ITAT-KOLKATA)