2013 (9) TMI 733

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....urities and investment and was engaged by Kotak Mahindra Securities to manage their funds and earn income in nature of profits/gains or dividends from dealing with securities. The assesse had received management fee as per contract with Kotak Mahindra Securities. 3. The respondent-assessee had shown a loss of Rs.1,90,29,988/- in derivative transactions. The Assessing Officer held that the loss was speculative loss under Section 73 of the Act. Secondly, the derivative transactions were during the period July, 2005 to September, 2005 and proviso (d) to sub-section 5 to Section 43 was violated. The proviso (d) to section 43(5) inserted with effect from 1st April, 2006 stipulates that eligible transactions should have been conducted/carried ou....

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....ble. He also observed that explanation to Section 73 was not applicable as assessee was an investment company and accordingly the respondent-assessee was not entitled to set off the said loss from derivative transactions. 6. On further appeal before the Income Tax Appellate Tribunal (tribunal, for short), the respondent has succeeded on the first issue and it has been observed that they were entitled to benefit under Section 43(5) proviso (d), even in respect of transactions carried out with effect from 1st April, 2006. Tribunal observed that Parliament had enacted the provision with effect from the said date, and delay, if any, in the issue of Rules and notification, cannot nullify the legislative mandate of the enactment. Delay was attri....

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....d is alleged or argued to contend that National Stock Exchange India Ltd. could not and should not have been notified from 1st April, 2006. 8. A similar factual matrix had come up for examination before the Supreme Court in S.A.L. Narayan Row and Another Vs. Ishwarlal Bhagwandas and Another, (1965) 57 ITR 149. It was noticed that the rules were framed subsequently and on this ground it was submitted that the main provision itself should not be applied. The said contention was rejected by the majority decision recording as under:- "The Attorney-General appearing on behalf of the Commissioner contended that to the fifth proviso to section 18A(6) no retrospective operation could effectively be given, because the rules, which alone could rend....