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TMI Blog2022 (7) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... abad dated 30.11.2017 for the AY 2013-14. 2. The assessee has taken the following grounds of appeal :- 1) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in treating the loss of Rs.8,17,98,385/- from the share business as speculative allegedly in view of Explanation to section-73 of the Income Tax Act,1961. 2) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition of Rs.8,17,98,385/- as speculative loss is bad in law and against the facts and circumstances of the case. 3) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in passing the impugned order without giving adequate opportunity of being heard. 3. Brief facts of the case are that during the year, the assessee had carried forward a loss of Rs.27,73,108/- loss from Trading in Derivatives on stock exchanges as Non-speculative in view of provisions of section 43(5) of, the Income Tax Act, 1961 and claiming that explanation to section 73 does not apply to derivatives. On the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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. 11. The facts of the decisions relied by assessee's counsel are entirely different and do not correspond to facts of the case in appeal. On the other hand the decision of the Hon'ble Delhi High Court is directly on the issue. There is no contrary decision of any other High Court on the issue that has been quoted by the assessee's counsel. Respectfully, following the decision of Hon'ble Delhi High Court directly covering the case, it is held that no interference is called for in the order passed by the Assessing Officer on this account. 5. Against the above order, the assessee is in appeal before us. We have heard both the parties and perused the record. 6. Ld. counsel of the assessee submitted that the issue is squarely covered in favour of the assessee by ITAT decision in assessee's own case for AY 2012-13 in ITA No.6203/Del/2015 order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any assessment year any loss computed in respect of a speculation has not been wholly set off under sub-section (1), so much of the loss as is not so set off or the whole loss where the assessee had no income from any other speculation business, shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and- (i) it shall be set off against the profits and gains, if any, of any speculation business carried on by him assessable for that assessment year; and (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on. (3) In respect of allowance on account of depreciation or capital expenditure on scientific research, the provisions of subsection (2) of section 72 apply in relation to speculation business as they apply in relation to any business. (4) No loss shall be carried forward under this section for more than [four] assessment years immediately succeeding the assessment year for which loss was first computed. (Explanation. -Where any part of the business of a company (other than a company whose gross total income consists ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gardless of whether standard exclusionary terms (such as unless the context otherwise requires ) are used. In The Vanguard Fire General Insurance Co. Ltd., Madras v. M/s 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 different meaning in different sections of the Act depending upon the subject or the context. That is why all definitions in statutes generally begin with the qualifying words similar to the words used in the present case namely, unless there is anything repugnant in the subject or context. Therefore in finding out the meaning of the word insurer in various sections of the Act, the meaning to be ordinarily given to it is that given in the definition clause. But this is not inflexible and there may be sections in the Act where the meaning may have to be departed from on account of the subject or context in which the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Explanation to Section 73(4) has been enacted to clarify beyond any doubt that share business of certain types or classes of companies are deemed to be speculative. In another part of the statute, which deals with the computation of business income, derivatives are excluded from the definition of speculative transactions. However, Hon'ble Delhi High Court has held that derivatives are based on stocks and shares which fall squarely within the Explanation to Section 73; therefore, it is ideal to contend that derivatives did not fall within that provision. 12. It is pertinent to note that Hon'ble Supreme Court in the case of M/ s. Apollo Tyres (supra) held units of UTI are not shares, and therefore, Explanation to Section 73 would not cover the loss, arising on the transfer of UTI. If legal inference can be drawn from the judgment of Hon'ble Supreme Court, then only the shares have to be construed strictly as given in Explanation to Section 73. This is more so, as fiction has been created in Section 73 and it is a settled law that a fiction cannot be enlarged to cover another fiction, therefore, when Future and Derivatives do not find mention and place in Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave any application? both dealing in shares and dealing in derivatives were at one point of time within the umbrella of speculative transaction. In the year 2006, dealings in derivatives deased to a speculative transaction. But dealing 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 dealing in shares were not similarly treated, is a pointed to show that the legislative intended to treat them differently. There is, as such no question of any unintended consequences. Thus, Hon'ble Calcutta High Court did not agree with the ratio of the decision of Hon'ble Delhi High Court in the case of DLF Commercial Developers Ltd. (supra). But, Delhi High Court is the Jurisdictional High Court and in normal circumstances, that has to be followed. But, the decision of Calcutta High Court reached before Hon'ble Supreme Court and Hon'ble Supreme Court in Civil Appeal No.4483 ..... 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