By TIOL News Service

MUMBAI, OCT 12, 2016: THE issue is - Whether jobbing activity is done to guard against business loss and hence can not be considered as a speculative transaction. YES is the answer.

Facts of the case

The assessee is an Individual. The assessee filed return for relevant AY, claiming jobbing loss. During assessment process, AO was of the view that the loss on account of jobbing activity was a speculative loss not covered by the exception in Section 43(5) of the Act. Thus the loss was not allowed to be set off but allowed to be carried forward as a speculation loss. Being aggrieved, the Assessee carried the issue in appeal to the CIT(A), who allowed the same. Being aggrieved the Revenue carried the issue in appeal to the Tribunal. The Tribunal, dismissed the Revenue's appeal by upholding the order of the CIT(A).Revenue filed appeal before the HC.

HC held that,

++ we find that in view of the clear provision as found in Section 43(5) proviso (c) of the Act, the jobbing activity done to guard against business loss could not be considered as a speculative transaction. Thus loss on account of Rs.60.37 lakhs claimed by the Respondent Assessee was allowed to be set off against business profits. We find that there is no dispute between the parties that the transactions entered into by the Respondent Assessee are in fact jobbing transactions. The provisions of Section 43(5) proviso (c) of the Act are very clear in excluding jobbing activity done to guard against loss from the ambit of speculative loss. It is a selfevident position on reading of Section 43(5) proviso (c) of the Act. Therefore jobbing transactions in the present facts would not be covered by the definition of speculative transaction in view of Section 43(5) proviso (c) of the Act. In the above view, the question, as proposed, does not give rise to any substantial question of law. Thus, not entertained.

(See 2016-TIOL-2424-HC-MUM-IT)