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TMI Blog2004 (10) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, question of applying clause (c) of the proviso does not arise. If a transaction is not made in course of jobbing or arbitrage to safeguard against the future loss, then such transactions would not fall within the scope of clause (c) of the proviso to section 43(5). It has never been the case of the assessee either before Assessing Officer or before CIT(A) that transactions of purchase and sale of shares, in which loss was incurred, were entered into in the course of jobbing and arbitrage to safeguard the future losses. Hence, the contention of assessee's counsel cannot be accepted even on this ground. Further, the Explanation to section 73 applies only to regular dealing in shares made in the normal course of business and not to speculative transactions falling u/s 43(5). It is only by virtue of such Explanation that such normal non-speculative transactions are deemed to be speculative transactions. Since, the loss to the assessee has arisen in the normal course of business i.e. purchase and sale of shares with delivery, the case of assessee would not fall u/s 43(5) and consequently, would not be covered by clause (c) of the proviso to section 43(5). Accordingly, such t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng speculation profit. This amount of Rs. 2,53,417 will however be added to the income declared by the assesses. 3. On appeal, the CIT(A) has confirmed the order of Assessing Officer on this issue by observing that facts of the present case fall within the scope of the provisions of Explanation to section 73, The contention of assessee that its case was covered by the proviso (c) to section 43(5) was also rejected in view of the clear provisions of Explanation to section 73. Aggrieved by the same, the assessee is in further appeal before the Tribunal. 4. Both the parties have been heard at length. The main contention of learned counsel for assessee is that his case falls within the scope of proviso (c) to section 43(5) which specifically excludes the transactions entered into by a member of stock exchange in the course of his regular business from the definition of speculative transactions. According to him, once the Legislature has excluded the transactions entered into by a stock broker, who is a member of stock exchange from the ambit of 'speculative transactions' as provided in section 43(5), it cannot be said by implication that Legislature would have intended to inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions has to be harmonized according to the applicability, facts and circumstances of the case and above all the intent of Legislature while enacting those provisions. 5. It may not be necessary to always cling to literariness and we should seek to endeavour to avoid an unjust and absurd result to make sense, where the purpose is apparent to the judicial eye even if some violence to the language is required and the language of the statute can be modified to accord with the intention of Legislature. The reliance is placed on the cases of State of Tamil Nadu v. Kodaikanal Motor Union (P.) Ltd. AIR 1986 SC 1973 and CWS (India) Ltd v. CIT[1994] 208 ITR 649 (SC). 6. Once the Legislature's intention is ascertained and the object and purpose of the legislation is known, it then becomes the duty of the court to give the statute a purposeful or a functional interpretation. For this purpose, where necessary, the Court may even depart from the rule that plain words should be interpreted according to their plain meaning. There must be no meek and mute submission to the plainness of the language. To avoid patent injustice, anomaly or absurdity or to avoid invalidation of a law, the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a speculative transaction. Section 73: Explanation: Where any part of the business of a company other than a company whose gross total income consists mainly of income which is chargeable under the heads 'interest on securities', 'Income from house property', 'Capital gains' and 'Income from other sources', or a company (the principal business of which is the business of banking or the granting of loans and advances) consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares. A comparable study of both the provisions clearly shows that the Legislature has defined the transactions which are speculative in nature in section 43(5) except which are carved out in the proviso while Explanation to section 73 declares certain transactions as deemed to be speculative which are otherwise not speculative. Hence, in my opinion, both the provisions hold the different fields. 8. Let us now consider these provisions in detail. 9. The main provisions of section 43(5) defin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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