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2011 (3) TMI 656 - HC - Income TaxSpeculation loss - Whether the explanation to Section 73 which creates a legal fiction by which the purchase and sale of shares specified in the said Explanation which is specifically used for the purpose of Section 73 as deemed speculation business can be applied to Sections 70, 71 and 72 and in determining the gross total income the said Explanation to Section 73 can at all be applied while considering the set off of loss under Sections 70 and 71 and carry forward of such loss such Section 72 of the Act? - Held that:- There is nothing illegal for the legislature to enact two different definitions of Speculation business applicable to the two different categories of the assessee in a taxing statute. Thus, the factors which weighed with the Supreme Court in the above case are not present in the facts and circumstances of the case and we propose to adopt the only possible interpretation of the Explanation added to Section 73 of the Act. The above decision thus is not applicable to the facts of the present case. It is clear that although ordinarily the object of an explanation is not to enlarge the scope of the original section that it is supposed to explain, if on a true reading of an Explanation it appears that it has widened the scope of the main section, effect should be given to the legislative intent notwithstanding the fact that the legislature named that provision as an Explanation. The loss suffered by the assessee in the purchase and sale of shares had fallen within the category of “speculation business” as per the Explanation to Section 73 of the Act and therefore, can be set off and carried forward only against profits and gains from speculation business and not from any other head. - Decision of ITAT maintained - Decided against the assessee
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