TaxTMI 
TaxTMI 
2004 (10) TMI 277
X X X X Extracts X X X X
X X X X Extracts X X X X
....siness loss with the income under the head 'income from other sources' which is arbitrary, unjust, contrary to the facts and circumstances of the case and bad in law. 2. The ld. CIT(A) has erred in concluding that proviso to section 43(5) is not applicable whereas the Explanation to section 73 has been applicable while considering the loss incurred as speculation loss which is contrary to the law, judicial pronouncements and arbitrary. 3. The ld. CIT(A) has erred in stating that the proviso (c) to section 43(5) is not applicable to the present case by not making harmonious construction between the proviso (c) to section 43(5) and Explanation to section 73 of the Act." 2. Briefly stated the facts as recorded by A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... within the scope of proviso (c) to section 43(5) which specifically excludes the transactions entered into by a member of stock exchange in the course of his regular business from the definition of speculative transactions. According to him, once the Legislature has excluded the transactions entered into by a stock broker, who is a member of stock exchange from the ambit of 'speculative transactions' as provided in section 43(5), it cannot be said by implication that Legislature would have intended to include the same within the meaning of speculative transactions. Proceeding further, it was mentioned by him that the intention of the Legislature in inserting the Explanation after section 73 was not to take away the case of a member....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0. 2. It is a well settled principle of interpretation that courts in construing a statute will give much weight to the interpretation put upon it, at the time of its enactment and since, by those whose duty it has been to construe, execute and apply it - K.P. Varghese v. ITO [1981] 131 ITR 597 (SC). 3. The intention of Legislature is to curb certain devices adopted by certain companies holding shares in different group companies, as it is clear from the circular (Para 19 of the Circular No. 204 dated 24-7-1975). 4. If there is a conflict between two provisions of law, enacted for different purposes and at different times, the conclusion drawn from the interpretation of such provisions has to be harmonized accordi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ticular class of assessee and put them to disadvantageous position vis-à-vis the other class of assessee. If the explanation is interpreted in the way it has been done in the present case there is a danger of administering the provision of law in a discriminatory and unintended way. 8. Even if there is any conflict between the provisions of section 43(5) Proviso (c) and the Explanation to section 73, then such conflict should be resolved in favour of the assessee. Reliance was placed on decision of Delhi High Court in the case of C.S. Mathur v. CBDT[1999] 235 ITR 769 and of Supreme Court in the case of Indian Engg. & Commercial Corpn. (P.) Ltd. [1993] 201 ITR 723. 6. On the other hand, the learned DR has strongly relied o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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', 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." A comparable study of both the provisions clearly shows that the Legislature has defined the transactions....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that contract which is entered into by a member of stock exchange in the course of any transactions in the nature of Jobbing or Arbitrage to guard against loss which may arise in the ordinary course of his business as such member and not each and every transaction entered into by such person independently. If a transaction is not made in course of jobbing or arbitrage to safeguard against the future loss, then such transactions would not fall within the scope of clause (c) of the proviso to section 43(5). It has never been the case of the assessee either before Assessing Officer or before CIT(A) that transactions of purchase and sale of shares, in which loss was incurred, were entered into in the course of jobbing and arbitrage to safeguar....