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TMI Blog2012 (8) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 143(1) on 23.05.2006. Subsequently, the case of the assessee was selected for scrutiny and notice under section 143(2) was issued to the assessee on 23.05.2006. The Assessing Officer vide assessment order dated 12.12.2007 made additions on the following counts:- i)Short term capital loss in respect of speculation business (Derivative Trading) Rs.66,52,030 ii)Commission to foreign agents Rs.2,94,071 iii)Disallowance u/s.14A on dividend income Rs.7,832 iv)Interest on delay of payment of dividend tax Rs.4,039 Aggrieved against the assessment order, the assessee filed an appeal before the CIT(A) assailing the order passed by the Assessing Officer. Now the assessee is in second appeal before the Tribunal challenging the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h effect from 1.4.2006. As regards grounds no.3 & 4, he submitted that the CIT(A) has wrongly confirmed the disallowance of the accrued commission not relating to the period under reference. In order to support his contentions, he has relied on the judgement of the Hon'ble Supreme Court of India in the case of Bharat Earth Movers Vs.CIT reported as 245 ITR 428(SC). 5. On the other hand, Dr. Yogesh Kamat representing the department strongly supported the order of the CIT(A) and submitted that the impugned order is well reasoned and detailed order and no interference in the said order is called for. He further submitted that a loss from trading in derivatives constitutes speculative loss which cannot be set off against short term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the assessment year 2006-07, cannot be set off against the profits of the same business in the assessment year 2006-07 or later assessment years. That aspect of the matter did not come up for consideration before Their Lordships. Similarly, the scope of provisions for set off and carry forward of losses did not come up for consideration before a coordinate bench of this Tribunal in the case of ACIT Vs Shreegopal Purohit (33 SOT 1). The coordinate bench apparently proceeded on the assumption that if a loss is characterized as speculation loss, in assessment proceedings for the assessment year in which loss was incurred, and profits from the same business in a subsequent year is characterized as non-speculation business profit, the forme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case CIT vs Hindustan Bulk Carriers Ltd (259 ITR 449), as follows: A construction which reduces the statute to a futility has to be avoided. A statute or any enacting provision therein must be so construed as to make it effective and operative on the principle expressed in maxim ut res magis valeat quam pereat i.e., a liberal construction should be put upon written instruments, so as to uphold them, if possible, and carry into effect the intention of the parties. [See Broom's Legal Maxims (10th Edition), page 361, Craies on Statutes (7th Edition) page 95 and Maxwell on Statutes (11th Edition) page 221.] A statute is designed to be workable and the interpretation thereof by a Court should be to secure that object unless crucial omission or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Bharat Earth Movers has held as under:- "The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. 9. In the instant case, the liability to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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