2013 (7) TMI 334 - DELHI HIGH COURT

Carry forward of losses - Speculative transactions - Derivative transaction - Benefit u/s 73 - Held that:- In terms of the Explanation to Section 73 (4) in the case of a company, business of purchase and sale of shares is deemed to be speculation business - Assessee is no doubt correct in contending that the only definition of derivatives is to be found in Section 43(5); yet the definition – to the extent it excludes such transactions from the mischief of the expression “speculative transactions” is confined in its application cannot be overlooked.

Since the expression “derivatives” is defined only in Section 43 (5) and since it excludes such transactions from the odium of speculative transactions, and further that since that has not been excluded from Section 73, yet, the Court would be doing violence to Parliamentary intendment. This is because a definition enacted for only a restricted purpose or objective should not be applied to achieve other ends or purposes. Doing so would be contrary to the statute - Stated objective of Section 73- apparent from the tenor of its language is to deny speculative businesses the benefit of carry forward of losses.

Tribunal erred in law in holding that the assessee was entitled to carry forward its losses - Following decisions of The Vanguard Fire & General Insurance Co. Ltd., Madras v. M/S. Fraser And Ross & Anr [1960 (5) TMI 25 - SUPREME COURT] and Rajshree Sugars and Chemicals Ltd. v. Axis Bank Ltd.[2008 (10) TMI 594 - MADRAS HIGH COURT] - Decided in favour of the revenue.