Income Tax Appellate Tribunal - Pune
Sanjay Eknath Kank,Ahmed Nagar vs Assessing Officer, Ahmed Nagar on 4 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCHES "SMC", PUNE
BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER
आयकर अपील सं. / ITA No.2684/PUN/2025
Assessment Year : 2022-23
Sanjay Eknath Kank, Vs. Assessing Officer,
At Post Mirajgaon, Ward-2, Ahmednagar
Tal. Karjat,
Ahmednagar - 414 401
Maharashtra
PAN : AHRPK1669H
Appellant Respondent
Assessee by : Shri Prasad Bhandari
(Through Virtual)
Revenue by : Shri Eknath Abhang
(Through Virtual)
Date of hearing : 03.02.2026
Date of pronouncement : 04.03.2026
आदे श / ORDER
The captioned appeal at the instance of assessee pertaining to the Assessment Year 2022-23 is directed against the order dated 29.09.2025 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called 'the Act') arising out of the Assessment Order dated 22.03.2024 passed u/s.143(3) r.w.s.144B of the Act.
2. The sole grievance of the assessee is that ld.CIT(A) erred in confirming the action of the Assessing Officer treating the loss incurred under Futures and Options (F&O) transaction carried out through recognised stock exchange as speculative loss instead of setting it off against the business income.
2 ITA No.2684/PUN/2025Sanjay Eknath Kank
3. Facts in brief are that the assessee is an individual engaged in providing professional health care services and is also actively involved in trading in the Futures and Options segment. For the year under consideration, assessee filed the return of income for A.Y. 2022-23 on 17.10.2022 declaring loss of Rs.10,94,321/- arrived at after claiming loss from Futures and Options transaction at Rs.35,84,969/-. After the case being selected for scrutiny and valid statutory notices being served upon the assessee, during the course of proceedings, ld. Assessing Officer observed that assessee has incurred loss of Rs.35,84,969/- from the transactions relating to Futures and Options, Commodity F&O and Currency F&O. All these transactions were carried out through broker namely Zerodha. However, since the assessee failed to furnish the demat account of the Broker and STT and CTT payment proof, ld. Assessing Officer denied the set off of loss at Rs.35,84,969/- treating it as speculative loss and assessed income at Rs.24,90,648/-.
4. Aggrieved assessee preferred appeal before ld.CIT(A) and reiterated the submissions that the transactions carried out on the recognised stock exchange did not fall in the category of speculative transaction and therefore the loss being business loss should have been allowed to be set off. However, ld.CIT(A) without disputing the contentions of the assessee, confirmed the action of the Assessing Officer solely for the reason that assessee has not furnished exchange trade data, statement of Demat account, STT payments, CTT payments and any statement pertaining to currency statement.
5. Ld. Counsel for the assessee referring to the documents furnished in the paper book running into 56 pages including 3 ITA No.2684/PUN/2025 Sanjay Eknath Kank the reliance placed on the decision of Coordinate Bench, Delhi in the case of ITO Vs.Felex Enterprises Pvt. Ltd. Vs. DCIT - ITA No.2159/Del/2012 order dated 20.09.2013 submitted that all the transactions carried out through the SEBI registered broker namely Zerodha are supported by contract notes exhibiting the STT and CTT payments. He submitted that the transactions have been carried out through recognised stock exchange and therefore the transactions are not speculative in nature and the loss incurred therefrom is to be allowed as business loss.
6. On the other hand, ld. DR supported the order of ld.CIT(A).
7. I have heard the rival contentions and perused the records placed before me. I observe that the assessee during the year under consideration has incurred loss of Rs.35,84,969/- from the transactions relating to Futures and Options, Commodity F&O and Currency F&O. For want of necessary details, both the authorities have treated it as speculative transaction and denied the set off of loss claimed by the assessee over business income. I note that speculative transaction has been defined in section 43(5) of the Act and the same reads as under :
"(5) "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips:
Provided that for the purposes of this clause--
(a) a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him; or
(b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or 4 ITA No.2684/PUN/2025 Sanjay Eknath Kank
(c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; or
(d) an eligible transaction in respect of trading in derivatives referred to in clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange; or
(e) an eligible transaction in respect of trading in commodity derivatives carried out in a recognised stock exchange, which is chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013 (17 of 2013), shall not be deemed to be a speculative transaction:
Provided further that for the purposes of clause (e) of the first proviso, in respect of trading in agricultural commodity derivatives, the requirement of chargeability of commodity transaction tax under Chapter VII of the Finance Act, 2013 (17 of 2013) shall not apply.
Explanation 1.--For the purposes of clause (d), the expressions--
(i) "eligible transaction" means any transaction,--
A. carried out electronically on screen-based systems through a stock broker or sub-broker or such other intermediary registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made or directions issued under those Acts or by banks or mutual funds on a recognised stock exchange; and B. which is supported by a time stamped contract note issued by such stock broker or sub-broker or such other intermediary to every client indicating in the contract note the unique client identity number allotted under any Act referred to in sub-clause (A) and permanent account number allotted under this Act;
(ii) recognised stock exchange" means a recognised stock exchange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified by the Central Government for this purpose.
Explanation 2.--For the purposes of clause (e), the expressions--
(i) "commodity derivative" shall have the meaning as assigned to it in Chapter VII of the Finance Act, 2013;
(ii) "eligible transaction" means any transaction,--
5 ITA No.2684/PUN/2025Sanjay Eknath Kank A. carried out electronically on screen-based systems through member or an intermediary, registered under the bye-laws, rules and regulations of the recognised stock exchange for trading in commodity derivative in accordance with the provisions of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) and the rules, regulations or bye- laws made or directions issued under that Act on a recognised stock exchange; and B. which is supported by a time stamped contract note issued by such member or intermediary to every client indicating in the contract note, the unique client identity number allotted under the Act, rules, regulations or bye-laws referred to in sub-clause (A), unique trade number and permanent account number allotted under this Act;
(iii) "recognised stock exchange" means a recognised stock exchange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified by the Central Government for this purpose;"
8. From perusal of the above section 43(5), I observe that the proviso to sub-section refers to various transactions pertaining to stock in shares, forward market, eligible transactions in respect of derivatives as well as eligible transactions in respect of trading in commodity derivatives which are carried out on a recognised stock exchange, do not fall under the definition of speculative transaction. The assessee in the instant case has demonstrated successfully with the help of documents filed in the paper book that the transactions have been carried out on a recognised stock exchange platform through the broker Zerodha along with the ledger account. Each and every transaction is documented by the contract notes and that Zerodha Broking Limited is registered with SEBI vide Registration No. INZ000031633. During the course of hearing before me, Revenue authorities failed to controvert this contention that the transactions have been carried out through a broker which is registered under SEBI and that the transactions in question relating to Futures and Options 6 ITA No.2684/PUN/2025 Sanjay Eknath Kank market have been carried out on recognised stock exchange. Under these given facts and circumstances since the transactions carried out by the assessee falls under the proviso to sub-section 43(5) of the Act and therefore are not to be treated as speculative transaction. In other words, loss arising from the alleged transactions is a normal business loss which the assessee is eligible to set off against other business income. It is also brought to my notice that in the subsequent assessment year 2023-24 when the assessee has carried out similar Futures and Options transactions through Zerodha, the Assessing Officer has accepted them to be business transactions in the assessment dated 18.03.2025 framed u/s.143(3) r.w.s.144B of the Act. Accordingly, finding of ld.CIT(A) is reversed. Assessee's claim of set off of loss at Rs.35,84,969/- being business loss is allowed to be set off against the other business income during the year. Grounds of appeal raised by the assessee are allowed.
9. In the result, the appeal of the assessee is allowed.
Order pronounced on this 04th day of March, 2026.
Sd/-
(MANISH BORAD) ACCOUNTANT MEMBER पुणे / Pune; दिन ंक / Dated : 04th March, 2026.
Satish 7 ITA No.2684/PUN/2025 Sanjay Eknath Kank आदे श की प्रतिलिपि अग्रेपिि / Copy of the Order forwarded to :
1. अपील र्थी / The Appellant.
2. प्रत्यर्थी / The Respondent.
3. The Pr. CIT concerned.
4. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, "SMC" बेंच, पण ु े / DR, ITAT, "SMC" Bench, Pune.
5. ग र्ड फ़ इल / Guard File.
आिे श नुस र / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अधिकरण, पुणे / ITAT, Pune