F&O Transaction carried out through recognized Stock Exchange is not Speculative Transaction, can be set off against Ordinary Business Income: ITAT

“4.2. We find that the loss from F&O business carried out through recognized stock exchange cannot be treated as speculative loss in view of the exceptions carried out under s.43(5) of the Act. As per clause(d) of  first proviso to section 43(5) of the Act inserted by the Finance Act, 2005 with effect from 01/04/2006, trading in derivatives carried out through recognized stock exchange will not be deemed to be a speculative transaction for the purposes of section 43(5) of the Act. Thus, the loss arising from trading in derivatives ought to be treated as ordinary business loss. Thus, the restrictions applicable for eligibility of set off of loss of speculative nature will not apply to the loss arising from F&O transaction.”

7. Thus, F&O transaction carried out through recognized stock exchange cannot be treated as speculative transaction. Therefore, I allow appeal of the assessee and direct the AO to grant set off of this loss against business income.
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