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TMI Blog2018 (8) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... - Appeal No. MA 08/Ind/2018 Arising out of ITA No. 62/Ind/2015 - - - Dated:- 21-8-2018 - Shri Kul Bharat, Judicial Member And Shri Manish Borad, Accountant Member Revenue by : Shri Yogesh Mishra, Sr. DR Assessee by : Shri S. N. Agrawal, CA ORDER Per Manish Borad, AM This Miscellaneous petition filed by the assessee pertaining to the A.Y. 2011-12 is directed against the order of Hon'ble I.T.A.T., Indore Bench, Indore dated 28.02.2018. 2. The assessee has pointed out that apparent mistake has occurred in the order of the Tribunal by submitting as follows; 01} That on the facts and in the circumstances of the case, the Ld CIT[A] erred in approving the treatment as given by the Ld AO by treating the loss incurred by the assessee on Future Option Transactions of ₹ 96,67,872/- as a speculative loss in place of normal business loss as claimed by the assessee as per express provision of section 43[5] Q[ the Act without properly appreciating the facts of the case and submission made before him. 02.] That on the facts and in the circumstances of the case the Learned CIT(A) erred in confirming the charging of interest u/s 234B and 234(' of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Para 1.13.2 of the synopsis. In Para 1.14.3 of the Synopsis, decision of Hon'ble Special Bench was referred in the case of Concord Commercial P Limited as reported in 95 ITD 117 wherein similar view was expressed. 4.3 That in para 1.15.2 of the Synopsis, decision of Hon'ble Delhi High Court in the case of DLF Commercial Development Limited was referred wherein in Para 7 of the said order, the Hon'ble High court has held that the scope of definition of provision of section 43 [5] of the Act is applicable to the pro vision of section 28 to 41 of the Act. In Para 1.15.3 of the Synopsis, para 8 of the decision of the Hon'b1e Delhi high court was discussed in detail wherein it was stated that first computation of Total Income has to be prepared as per Chapter IV, in Section II and if the resu1tin~ figure was at a loss than provisi on of section 73 [41 gets attracted on the same. 4.4 That in Para 1.15.5. and 1.15.6 of the synopsis, Para 11 and 12 of the decision of the Hon'b1e Delhi High court in the case of DLF Commercial Developments Limited was discussed wherein it was held by the Hon'b1e High Court that where there was loss from F 0 Business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see further referring to judgments of Hon'ble Supreme Court in the case of Vegetable Product Ltd reported in 88 ITR 192 submitted that the decision of jurisdictional High Court is not available and the issue has been decided contrary to each other by other Hon'ble High Courts then in such situations judgment favourable to the assessee should be followed. The Ld. Counsel for the assessee therefore prayed that the view taken by Hon'ble High Court of Calcutta in the case of Asian Financial Services Ltd (Supra) should have been followed by the Tribunal and as this is an apparent mistake, the same needs to be rectified. 5. On the other hand the Departmental Representative opposed the submissions made by Ld. Counsel for the assessee and relied the findings of the Tribunal. 6. We have heard rival contentions and perused records placed before us. Through this miscellaneous application it has been pleaded that an apparent mistake on record has cropped up in the order of Tribunal as the judgments and decisions favouring the assessee which were placed on record during the course of hearing, have not been considered by the Tribunal while adjudicating the issue. From perusal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 . Para-11: Further co-ordinate bench in the case of ACIT V/s M/s. Sucon India Ltd (supra) held that the treatment of set off of loss on account of trading of derivatives and the I.T.A.T., Delhi in their decision favouring the assessee considered both the judgments of High Court of Delhi in the case of DLF Commercial Dev. Ltd (supra) and Calcutta High Court in the case of Asian Financial Services Ltd (supra) and decided in favour of the assessee by following the judgment of Hon'ble Apex Court in the case of Vegetable Product Ltd (supra) observing as follows; 3.7 We have heard the rival submission of the parties and perused the relevant material on the record. In the grounds raised by the assessee, two issues emerge before us. The first issue is whether loss from dealing in derivative transaction can be set of against business income or not. Second issue before us is whether loss from the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year for which the loss was first computed. 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 '1, 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.} Section 43, to the extent it is relevant, reads as follows: 43. In Sections 28to 41 and in this section, unless the context otherwise requires- ********** ********* (5) Speculative transaction means a transaction in which a contract for the purchase of sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips: Provided that for the purposes of this clause - (a) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied that the scope of the definition is restricted in its application to working out the mandate of Sections 28 to 41 of the Act. In terms of the Explanation to Section 73(4), in the case of a company, business of purchase and sale of shares is deemed to be speculation business. However, certain companies are excluded from this Explanation, which are: (i) 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'. (ii) a company, the principal business of which is the business of banking or the granting of loans and advances. Section 43 defines, for the purpose of Sections 28 to 41, certain terms. The latter provisions fall in Chapter IV, in Section 0, which deal with computation of business income. The said provisions provide for matter relating to computation of such income, rent taxes, insurance of buildings, repairs of plant and machinery, depreciation, reserves for shipping business, rehabilitation fund, expenditure on certain eligible objects or schemes, deductions, amounts not deductible, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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. In The Vanguard Fire General Insurance Co. Ltd., Madras v. MIS. Fraser And Ross Anr AIR 1960 SC 971 it was held that: It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as' the word defined is said to mean a certain thing, it is possible for the word to have a somewhat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself does not qualify for the benefit, as they (derivatives - once removed from it and entirely dependent on stocks and shares, for determination of their value). 12. In the light of the above discussion, it is held that the Tribunal erred in law in holding that the assessee was entitled to carry forward its losses; the question framed is answered in favour of the revenue and against the assessee. The appeal is, therefore, allowed; there shall be no order as to costs. 3.7.2 On the other hand, the learned counsel of the assessee relied on the decision of the Hon'ble High Court of Calcutta in the case of Asian Financial Services Ltd. Vs. Commissioner of Income Tax-3, Kolkata (supra). In the said case one of the questions raised was that, whether on the true and proper interpretation of the Explanation to section 73 of the Income-tax Act, 1961, the Tribunal was justified in law in holding that loss of ₹ 3,24,76,185/- incurred in eligible transaction within the meaning of proviso (d) to section 43(5) not involving any purchase/sale of shares as such was speculation loss? 3.7.3 The Hon'ble High Court of Calcutta disagreed with the decision of the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yana High Court in the case of the assessee. The learned counsel relying on the decision of the Hon'ble Supreme Court in the case of Vegetable Product Ltd., reported in 88 ITR 192 submitted that where contrary decision of the Hon'ble high courts other than the jurisdictional High Court are available, then in such a situation, decision favourable to the assessee should be followed. The Hon'ble Supreme Court in the case of vegetable product Ltd (supra) held as under: 4. There is no doubt that the acceptance of one or the other interpretation sought to be placed on s. 271 (1 ) (a) (i) by the parties would lead to some inconvenient result, but the duty of the Court is to read the section, understand its language and give effect to the same. If the language is plain, the fact that the consequence of giving effect to it may lead to some absurd result is not a factor to be taken into account in interpreting a provision. It is for the legislature to step in and remove the absurdity. On the other hand, if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. This is a well- accepted rule of constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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