2017 (6) TMI 79 - AT - Income Tax

Claim of set off of speculation loss of A.Y.2001-02 against the speculation income - Held that - Assessee s claim of set off of speculation loss of A.Y.2001-02 against the speculation income of the year under consideration has to be allowed. As held by the Special Bench which followed the decision of Apex Court in the case of Govinddas & Others vs. ITO (1975 (12) TMI 144 - SUPREME COURT), (a decision of larger Bench of the Apex Court comprising three of their lordships) that the golden rule of construction is that in the absence of anything in the enactment to show that it is to have retrospective operation, it cannot be so construed as to have the effect of altering the law applicable to a claim in litigation at the time when the act was passed. Accordingly, respectfully following the precedent, we set aside the orders of the authorities below and decide the issue in favour of the assessee.

Summary

Issues:
1. Set off of speculation loss brought forward from Assessment Year 2001-02 against the speculation profit of the current year.
2. Carrying forward speculation loss for set off in future years.

Analysis:
1. The appeal was against the order of Ld. CIT-A regarding the set off of speculation loss brought forward from Assessment Year 2001-02 against the speculation profit of the current year. The AO held that speculation loss of A.Y. 2001-02 cannot be carried forward after A.Y. 2005-06 as per Section 73(4) of the I.T. Act, 1961. The Ld. CIT-A considered the amended provisions and the decision in the case of Reliance Jute Industries Ltd., holding that the AO was justified in disallowing the claim of carried forward speculation loss. The appellate tribunal, after considering the Special Bench decision in a similar case, held in favor of the assessee, allowing the set off of speculation loss against the speculation income of the year under consideration. The tribunal followed the golden rule of construction and set aside the orders of the authorities below, deciding the issue in favor of the assessee.

2. The second issue raised was regarding carrying forward speculation loss for set off in future years. The appellant sought direction for the Assessing Officer to set off speculation loss brought forward from Assessment Year 2001-02 against the speculation profit of the current year. The Ld. CIT-A analyzed the provisions of Section 73 of the Income Tax Act and the relevant case laws. The tribunal, after considering the Special Bench decision and the principles of statutory interpretation, allowed the claim of set off of speculation loss of A.Y. 2001-02 against the speculation income of the year under consideration. The tribunal emphasized the importance of adhering to the plain grammatical meaning of the words used in the statute and decided the issue in favor of the assessee.

In conclusion, the appellate tribunal allowed the appeal filed by the assessee, setting aside the orders of the authorities below and deciding both issues in favor of the assessee based on statutory interpretation and relevant legal precedents.