Setoff of Speculation loss

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Piyush D. Acharya (Querist)
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25 February 2011 hi,
i want to know that,
i have speculation loss on sale of share which i want to adjust against profit on sale of commodities in future & option market.

can i get set off, is any case law available in this regards.

CA Dhiraj Ramchandani

CA Dhiraj Ramchandani (Expert)
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25 February 2011 Yes u can set off

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Piyush D. Acharya

Piyush D. Acharya (Querist)
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25 February 2011 any case law for this is available sir.

Piyush D. Acharya

Piyush D. Acharya (Querist)
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25 February 2011 F&O transactions are not speculative transactions and thus, the income from such transactions cannot be set off against the speculation loss.
CASE LAW DETAILS
Decided by: ITAT, `E’ BENCH, MUMBAI, In The case of: ACIT v. Shreegopal Purohit, Appeal No.: ITA NO. 5666/M/2007, Decided on: June 30, 2009

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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25 July 2025 Got it! Here’s a clear summary of your query about set-off of speculation loss against profit from futures and options (F\&O) trading:

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### Can Speculation Loss on Shares be Set Off Against Profit on F\&O Transactions?

**Short Answer:**
No, **speculation loss** from sale of shares **cannot** be set off against **profits from F\&O transactions**, because:

* **Speculative transactions** are defined under tax law differently from F\&O transactions.
* F\&O transactions are treated as **non-speculative business income** (or non-speculative transactions).
* Therefore, **losses from speculation** cannot be adjusted against **profits from F\&O**, as they belong to different categories.

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### Relevant Case Law:

* **ITAT Mumbai, E’ Bench** in the case of
**ACIT v. Shreegopal Purohit**, ITA No. 5666/M/2007, decided on June 30, 2009

The Tribunal held that:

* Futures & Options transactions are not speculative transactions.
* Income from F\&O is taxable under business income head and is non-speculative.
* Hence, speculation loss cannot be set off against profit from F\&O.

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### Summary

* Speculation loss (e.g., from intraday trading or sale of shares in certain contexts) is limited to set off only against speculation gains.
* F\&O income/losses are treated as business income/loss and follow a different set-off and carry-forward rule.

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If you want, I can help you draft a legal note or summarize this in your own words for your records or submission. Would you like that?

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