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TMI Blog2012 (8) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ax [2000 (8) TMI 4 - SUPREME COURT ] if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date what should be certain is the incurring of the liability - As the liability to pay commission has arisen by virtue of sales in the financial year 2004-05 relevant to the assessment year 2005-06. The realization of sale amount in the next financial year will not make much difference as the liability to pay commission had crystallized in the financial year 2004-05 itself after sale - in favour of assessee. - ITA No.450/Mds/2011 - - - Dated:- 22-6-2012 - N S Saini, Vikas Awasthy, JJ. For Appellant: Mr R Vijayaraghavan, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paterson Securities Pvt.Ltd. reported in 7 Taxmann 129 in holding the transactions in derivatives not to be considered as speculation loss and to be allowed as a business loss of the assessee. 2. The CIT(A) has erred in not giving the benefit of the clarification u/s.43(5) of the amended provisions w.e.f. 1.4.2006 holding that the derivative transaction is not a speculative transaction, if the same is done through the stock exchange. 3. The CIT(A) has erred in confirming the disallowance of Rs. 2,94,701/- of the accrued commission not relating to the year in appeal, though it is the accounting practice consistently followed by the assessee as well as supported by accounting principles. 4. Alternatively, the CIT(A) should have given the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liability of commission had not crystallized on the amount disallowed by the CIT(A). 6. We have heard the submissions made by the parties and have gone through the case laws cited by the counsel for the assessee. In Gajendra Kumar T.Agarwal s case, the coordinate Bench of the Tribunal has held as under:- 22. In the light of the views so expressed by Hon ble jurisdictional High Court, we must proceed on the basis that the losses incurred in the assessment years prior to 2006-07, in dealing in derivatives, must be held to be losses of speculation business. To that extent, the issue is covered against the assessee. However, the question whether such losses of dealing in derivatives, which have been treated as losses of speculation busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of these decisions thus deal with the issue which has come up for our consideration. 23. In view of the above discussions, though subject to certain conditions which are not relevant for the present purposes, the assessee was indeed entitled to set off the loss incurred, in the assessment years prior to the assessment year 2006-07, in the business of dealing in derivatives, against the profits earned in the assessment year 2006-07 and later assessment years. x x x x x x 27. As a result of the amendment in Section 43(5) with effect from 1st April 2006, losses incurred in derivative trading are held to be eligible for being set off against normal business profits, as derivate trading itself is treated as a non- speculative business, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 1963 SC 1062. The Courts will have to reject that construction which will defeat the plain intention of the Legislature even though there may be some inexactitude in the language used - Salmon v. Duncombe [1886] 11 AC 627 p. 634 (PC), Curtis v. Stovin [1889] 22 CBD 513 referred to in S. Teja Singh s case (supra). If the choice is between two interpretations, the narrower of which would fail to achieve the manifest purpose of the legislation we should avoid. Whenever it is possible to do so, it must be done to construe the provisions which appear to conflict so that they harmonise. It should not be lightly assumed that Parliament had given with one hand what it took away with the other. 7. In the light of the findings of the co-o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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