9911796707
TMI Blog2015 (8) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... iture on certain eligible objects or schemes, deductions, amounts not deductible, profits chargeable to tax, etc. The assessee is no doubt correct in contending that the only definition of derivatives is to be found in Section 43 (5); yet the Court cannot ignore or overlook that the definition ' to the extent it excludes such transactions from the mischief of the expression "speculative transactions" is confined in its application. Parliamentary intendment that such transactions are also excluded from the mischief of Explanation to Section 73 (4), however, is not borne out. It is no doubt, tempting to hold that since the expression "derivatives" is defined only in Section 43 (5) and since it excludes such transactions from the odium of speculative transactions, and further that since that has not been excluded from Section 73, yet, the Court would be doing violence to Parliamentary intendment. The stated objective of Section 73- apparent from the tenor of its language is to deny speculative businesses the benefit of carry forward of losses. As no distinguishing decision has been brought on record by the Ld. DR in favour of the Revenue, respectfully following the decision of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the meaning of explanation to subsection 4 of section 73 of the Incometax Act, 1961. 3. Briefly stated the facts of the case are that the assessee is dealing in share and security. While scrutinizing the return of income, the Assessing Officer noticed that the assessee has incurred loss from trading in securities /shares as under: Profit on sale of shares ₹ 24,25,505/- Loss on fall in value of shares Rs. (92,46,676) Net figure (-) ₹ 68,21,171/- 4. The assessee was asked to explain as to why this loss should not be treated as speculation loss invoking the provision of Explanation of Sec. 73 of the I.T. Act, 1961. The assessee filed a detailed reply which read as under: Application of provision of explanation to Sec. 73 in respect of fall in value of closing stock by ₹ 92,46,676/-. From the perusal of the Profit Loss a/c. Particularly schedule 7, your honour would find that following are the income from trading in securities, the break up in as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of speculation profit, which has to be set off against the loss in fail in value of shares: 5. After considering the detailed submission made by the assessee, the AO observed that the NSE and BSE were notified w.e.f. 24.01.2006 vide notification No. 2 of 2006 for the purpose of S. 43(5) proviso(d), according to which the profit/loss on derivative transaction upto 24.1.2006 is to be treated as speculative profit/loss therefore, the proviso(d) to Sec. 43(5) is inserted w.e.f. 1.4.2006 and is applicable from A.Y. 2007-08. Since the assessee s case is for A.Y. 2006-07, therefore, is not covered by this proviso. The AO further declined to entertain the claim of the assessee to set off loss against profit on sale of shares as it was not claimed by way of a revised return. The AO further proceeded by considering the explanation to Sec. 73 of the Act and held that the assessee is carrying on business of trading in shares and does not fall in exceptions provided in Explanation to Sec. 73 of the Act therefore, the entire loss claimed by the assessee relating to share transactions as well as loss resulting on valuation of closing stock is treated as Speculation loss. The AO accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Tribunal, wherein the Tribunal has held as under: It is no doubt true that the Ld. DR can make any arguments in support of the stand taken by the Assessing Officer but there are certain inherent limits of his arguments inasmuch as he cannot transgress the boundaries made by the AO. In other words, the Ld. DR can support the action of the AO with any arguments, he can rely on any case law in support of the Assessing Officer s case, but he cannot make out altogether a new case which was not the subject matter of consideration by the Assessing Officer or the Learned First Appellate authority. 11. The Ld. Counsel pointed out that a similar view was taken by the Tribunal, Pune Bench in the case of ITO Vs Anant Y. Chavan 126 TTJ 984. Referring to the Special Bench decision of the Tribunal, Mumbai in the case of Mahindra Mahindra 313 ITR (Trib.) 263 particular page 322 the Ld. Counsel pointed out to the observations of the Special Bench which read as under: In our considered opinion, the Ld. Departmental Representative has no jurisdiction to go beyond the order passed by the Assessing Officer. He cannot raise any point different from that considered by the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vatives is defined only in Section 43 (5) and since it excludes such transactions from the odium of speculative transactions, and further that since that has not been excluded from Section 73, yet, the Court would be doing violence to Parliamentary intendment. This is because a definition enacted for only a restricted purpose or objective should not be applied to achieve other ends or purposes. Doing so would be contrary to the statute. Thus contextual application of a definition or term is stressed; wherever the context and setting of a provision indicates an intention that an expression defined in some other place in the enactment, cannot be applied, that intent prevails, regardless of whether standard exclusionary terms (such as unless the context otherwise requires ) are used - Vanguard Fire General Insurance Co. Ltd., v. Fraser Ross Anr AIR 1960 SC 971 and N.K. Jain Ors Vs C.K. Shah Ors. AIR 1991 SC 1289 applied. 11.4. The following observation of the Hon ble Delhi High Court is also worth mentioning. The stated objective of Section 73- apparent from the tenor of its language is to deny speculative businesses the benefit of carry forward of losses. Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
