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TMI Blog2016 (12) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 2015 is curative has not impressed us for the simple reason that the amendment to Section 43(5) was made by the legislature with effect from 1st April, 2006. For long 9 years they allowed that situation to continue not because of any accidental error or omission on their part. That was a well considered step. We are, as such unable to hold that the amendment made with effect from 1st April, 2015 shall have a retrospective effect on the plea that it is curative in nature. That can only be done by legislature and not by us. In the year 2006, dealings in derivatives ceased to a speculative transaction. But dealings in shares by a company, whose principal business was dealing in shares, were deliberately retained within the ambit of speculative transaction and has ultimately been lifted only in the year 2015. It cannot be said that this was a step to remedy any unintended consequences. The fact that in 2006 dealings in derivatives were treated as deemed business, but the dealings in shares were not similarly treated, is a pointer to show that the legislature intended to treat them differently. There is, as such no question of any unintended consequence. We are, as such, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the income arising out of trading in derivatives (future and options). That question was answered by the Assessing Officer in the negative by holding as follows:- The said submission of the assessee has been considered carefully. In the said submission, the assessee has tried to prove that the nature of transactions are same in case of share trading and Derivative transactions, although the activities are different in the point of view of business as well as income tax point of view. Explanation to Section 73 is not meant for Derivative trading, as it specifically states consists of purchase and sale of shares of other companies .. . On the other hand, as per provisions of Section 43(5)(d), an eligible transaction in respect of trading in derivatives referred to in clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), carried out in a recognised stock exchange shall not be deemed to be a speculative transaction. Therefore, activities in Future Option cannot be treated as speculative transactions. Therefore, these two kinds of activities cannot be treated under same head. The assessee s case is not covered by the exceptions provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 11,32,95,921/- as loans and advances out of interest free and interest bearing funds while the investment in shares was only ₹ 1.29 crores as per balance sheet for the financial year and assessee further relied upon the judgements of 93 ITD 177 Calcutta Special Bench and 38 SOT 578 (Del) in support of its contention that principal business of the assessee company is of granting of loans and advances and so assessee company is not hit by Explanation to Sec.73 of the I.T. Act, 1961. Keeping in view the facts and circumstances, since the principal business of the assessee company is of giving loans and advances the assessee is entitled to get relief on ground of 3. Therefore, the ground no.3 is allowed. In an appeal by the revenue, the question was again answered by the Tribunal in favour of the assessee for the following reasons. 2.15 In view of the aforesaid facts and circumstances and judicial precedents relied upon hereinabove, we hold that the claim of the assessee for set off of loss from share dealing should be allowed from the profits from F O in share transactions, the character of the income being the same and also hold that before application of the Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause of the sentence which fall squarely .. , qualifies the word shares and not the word derivatives . We have no difficulty in accepting the views of the Delhi High Court when they say that shares fall squarely within the Explanation to Section 73(4) but we are unable to agree when derivatives are treated at par with the shares because the legislature has treated them differently. He, however, submitted two points for our consideration. The case of the assessee should be covered by the exceptions carved out in the Explanation to section 73 which provides that the business consisting of purchase and sale of shares would not amount to a speculation business in case the principal business of the assessee is granting loans and advances. According to him, this point was not gone into by the learned Tribunal though the Commissioner had granted relief by holding that the principal business of the assessee company is of giving loans and advances the assessee is entitled to get relief on ground no.3. He submitted there should be a remand. We have not been impressed by this submission. The Assessing Officer has in his judgment dealt with this point. The assessee has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder attack is not right but only when it is shown to be wrong. These twin principles serve as backdrop to our approach to the rival contentions in the case. The other reason why we are not inclined to remand the matter is that the assessee himself before the Assessing Officer contended that .in our case the share trading is our sole business during the assessment year under concern . The second submission was that the Legislature by an amendment of the Explanation to section 73, introduced with effect from 1st April, 2015, made a further exception in favour of a company, the principal business of which is the business of trading in shares. According to him, even assuming that the principal business of the assessee was dealing in shares, the relief of set off would be available under the amended Act with effect from 1st April, 2015. He submitted that this amendment though introduced with effect from 1st April, 2015 should be deemed to have a retrospective operation because this is an amendment which is curative in nature. In support of the aforesaid submission, he drew our attention to the report of the Wanchoo Committee, which was one of the reasons why the Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions should be made for those companies which have dealings in shares as their principal business and, therefore, the amendment was introduced with effect from 1st April, 2015. That is the reason why, he submitted, this amendment is curative in nature and should be deemed to have a retrospective operation. He submitted that the losses arising out of dealings and transactions in derivatives by those companies whose principal business consisted of dealing in shares could have been set off against the income arising out of dealings in shares. But that is no longer possible once the amendment has been made with effect from 1st April, 2006. That question may be considered in an appropriate case. In the case before us, we are concerned with the assessment year 2008-09 and the amendment carving out an exception in the explanation to Section 73 for the companies, which have dealings in shares as their principal business, was made effective only on 1st April, 2015, that is to say, almost 8 years after the assessment year under consideration. We, as such, are not inclined to take notice of the earlier submission. Further, it appears from the Memorandum explaining the provisions in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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