Sec. 43(5) & 73 of Income Tax Act, 1961— Loss—loss incurred by the assessee on derivative transactions would fall within the ambit of explanation to s. 73 so as to be treated as speculation loss as the derivative transaction carried out by the assessee falls within the expression of "eligible transaction" as defined in s. 43(5).

Facts: The short point that arises for our consideration is whether the loss incurred by the assessee on derivative transactions would fall within the ambit of explanation to s. 73 so as to be treated as speculation loss.

Held, that provisions of s. 43(5) define the expression "speculation transaction". There is no dispute that the derivative transaction carried out by the assessee were carried out in recognised stock exchange through a registered stock broker registered with SEBI. As per s. 43(5) "Speculative transaction" is defined to mean a transaction in which the contract for the purchase or sale of any commodity, including the stocks and shares is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrip. Clause(d) of proviso to s. 43(5) provides that for the purpose of s. 43(5) , ‘eligible transaction’ in respect of any trading in derivatives referred to in s. 2(ac) of the Securities Contracts (Regulation) Act, 1956 carried out in recognised stock exchange shall not be deemed to be a speculative transaction. It is not in dispute that the derivative transaction carried out by the assessee falls within the expression of "eligible transaction" as defined in s. 43(5). Hence, it could be safely concluded that the loss in derivative transactions incurred by the assessee could be treated as speculation loss in the facts and circumstances of the instant case. - MEGHA PROPERTY V/s ITO - [2020] 26 ITCD Online 081 (ITAT-DELHI)