The Tax Publishers2019 TaxPub(DT) 3760 (SC) : (2019) 414 ITR 0227 : (2019) 308 CTR 0665 : (2019) 265 TAXMAN 0003

INCOME TAX ACT, 1961

Section 73

Where assessee's principal business activity was of trading in shares and securities, incurred loss (speculative loss) as a result of its activity of trading in shares, said loss was not capable of being set off against the profits which it had earned against the business of futures and options.

Loss - Speculation business - Loss from activity of trading in shares -

Assessee was registered as a non-banking financial company. On scrutiny, a notice was issued under section 143(2) and AO recorded that principal business activity of assessee was trading in shares and securities and loss from share trading of assessee was held to be a speculation loss. AO held that in view of the provisions of section 43(5)(d), activities pertaining to futures and options could not be treated as speculative transactions and not to be capable of being set off against the profits from business. High Court held that profits which had arisen from trading in futures and options were not profits from a speculative business. Held: Parliament amended section 43(5) with effect from 1-4-2006 in relation to the business of trading in derivatives, Parliament brought about a specific amendment in the Explanation to section 73, insofar as trading in shares is concerned, with effect from 1-4-2015. The latter amendment was intended to take effect from the date stipulated by Parliament and there was no reason to hold either that it was clarificatory or that intent of Parliament was to give it retrospective effect. Loss occurred to assessee as a result of its activity of trading in shares was not capable of being set off against the profits which it had earned against the business of futures and options since the latter did not constitute profits and gains of a speculative business.

REFERRED :

FAVOUR : Against the assessee

A.Y. :



 

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