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This appeal of the Revenue is directed against the order of the CIT(A)-IX, Chennai treating the loss of ` 24,78,733/- incurred by the assessee in futures & options trading as business loss. According to the Revenue, futures & options trading (in short F&O) carried on by the assessee are speculative transactions which were ultimately settled other than by actual delivery or transfer of commodities or scrips. Further as per the Revenue, assessee himself had added back the loss on F&O and intraday trading in its computation.

2. Short facts apropos are that assessee, engaged in the business of purchase and sale of shares, plots and financing had declared total income of ` 9,83,680/- in his return. During the course of assessment proceedings it was noted that assessee had incurred loss of ` 24,78,733/- in F&O trading and ` 1,05,890/- in intraday trades. Assessee itself in his return of income filed, had considered such losses to be not allowable for tax purposes. From the net loss as per his profit and loss account, assessee had deducted such loss on F&O trading and intraday trades for arriving at the returned total income of ` 9,83,680/-. Assessment was completed by the AO in the lines of the computation furnished by the assessee, except two additions. One was for expenses relating to loss in intraday trades and F&O, which assessee had estimated at ` 35,000/- against which AO estimated at ` 1 lakh. Second addition was on account of disallowance of ` 1 lakh out of agricultural income claimed by the assessee.

3. Assessee went on appeal before the CIT(A) arguing that the loss of ` 24,78,733/- in future & option trading was not speculative in nature. It also submitted before the CIT(A) that the loss of ` 1,05,890/- in intraday transaction of shares was also not speculative in nature. It was, pleaded that such losses had to be considered as business loss only. Ld. CIT(A) was appreciative of this contention in so far as it related to F&O. According to him, futures & option transactions were business transactions. For coming to this conclusion, he relied on the amendment to sec. 43(5) by Finance Act, 2005 with effect from 01-04-2006, whereby loss on account of dealing in futures & option transactions and other derivative products were excluded from the definition of "speculative transaction". He thus accepted the appeal of the assessee and held that insofar as loss from future & option transaction was concerned, it was to be considered only as business loss. However, vis-à-vis the loss on intraday trades, the CIT(A) accepted the view of the AO.