1. This appeal by the revenue and cross-objection by the assessee is directed against the order of the AAC dated 14-7-1981 relating to the assessment year 1976-77.
2. The facts relevant for the determination of the issue involved in the appeal and the cross-objection lies in a narrow compass and a look at them would help us in the appreciation of the issue involved. The assessee is a registered firm working under the name and style of Kewal Krishan Sat Pal. During the course of assessment proceedings, the ITO found that the assessee had shown a loss of Rs. 44.386 in sarson account. The ordinary business of the assessee was in utensils. It was explained to the ITO that the assessee-firm had purchased sarson through Bal Krishan Mohinder Pal, Bega Purana, and the said sarson was sold to Devi Dass Gopal Krishan, Moga. In this transaction, the assessee suffered a loss of Rs. 44,386. Since it was a single transaction in which the loss arose, the ITO asked the assessee to show cause why the loss should not be treated as loss in speculation because the main business of the firm was purchase and sale of utensils. After obtaining the explanation of the assessee, the ITO found that the assessee had no godown on rent. He also found that the expenses relating to this transaction had been debited into the accounts of the assessee but no delivery of the sarson had actually been taken. The ITO, on these facts, drew an inference : "that the firm tried to neutralize the gain of utensil business with a loss in sarson sale which cannot be accepted as genuine one as no actual delivery of sarson was obtained and no effort was made to sell it on profitable basis or to store for the next year when it could be sold at the higher rates".
With these observations, the sum of Rs. 44,386 was added back to the income declared.
3. The ITO also noted that the assessee-firm was constituted of three partners whose withdrawals were less than Rs. 1,000 per month. Keeping in view the standard of living of the family, he added Rs. 4,000 to the total income of the firm on account of low withdrawals. The assessment was framed on 23-3-1979 on a total income of Rs. 49,424 before the firm's tax. This assessment was challenged in appeal before the AAC.4. The AAC held that the amount of Rs. 44,386 "disallowed by the ]TO on the ground that it was a speculation loss" could not be termed as speculation loss in view of the judgment of the Chandigarh Bench of the Tribunal in IT Appeal No. 307 of 1979 dated 20-8-1980. He, however, confirmed the addition of Rs. 4,000 which had been made by the ITO on account of low withdrawals of the partners of the firm.
5. In appeal before us, the revenue proceeded with the preliminary submission that though the Chandigarh Bench of the Tribunal had taken a view in IT Appeal No. 984 of 1976-77 in the case of Arore, Cotton Co.
that a single transaction cannot constitute speculative business, yet the issue is to be examined afresh in view of the submissions that follow. It was contended by Shri Khichi, junior authorised representative, that the judgment of the Bombay High Court in the case of CIT v. India Commercial Co. (P.) Ltd.  106 ITR 465 is not against the revenue as such because the ratio of the judgment is not against the revenue. The observations that have been relied on in the earlier case and in the case of the assessee are only by way of obiter in that case. It was further submitted that though the judgment of the Andhra Pradesh High Court in the case of Addl. CIT v. Maggaji Shennal  114 ITR 862 is against the revenue, yet one may note that this judgment does not take note of the Bombay High Court judgment. It was further submitted that the Madhya Pradesh High Court in the case of CIT v. Bhikamchand Jankilal  131 ITR 554 has considered the object of Explanation 2 to Section 28 of the Income-tax Act, 1961 ("the Act"), and has also considered the judgment of the Bombay High Court and the Hon'ble Court has come to the decision that a speculative transaction could amount to speculation business even if it fulfils the definition of "business" under Section 2(13) of the Act or if it amounts to an adventure or concern in the nature of trade. Neither repetition nor continuity of similar transactions is necessary to constitute a transaction as an adventure in the nature of trade and even a single transaction may constitute business. It was further stressed by the learned departmental representative that there s nothing in the context of Explanation 2 to Section 28 to show that a 'single speculative transaction though it is an adventure in the nature of trade, cannot amount to a speculation business.
6. Anticipating an argument from the opposite side to the submissions that he had made that there may be two reasonable views possible in the interpretation of a provision under the Act and in such a situation the one that favours the subject is to be adopted, the learned departmental representative invited our attention to the judgment of the Punjab and Haryana High Court in the case of Hand Lal Sohan Lal v. CIT  110 ITR 170 (FB) with particular reference to the observations made by Shri Chinappa Reddy, J., as he then was, that it is true that a taxing provision must receive a strict construction at the hands of the courts and if there is any ambiguity, the benefit of that ambiguity must go to the assessee. But that is not the same thing as saying that a taxing provision should not receive a reasonable construction. In every case it is the duty of the judge to consider which is Me more reasonable view and accept that which is more reasonable in view of this. He submitted that even if the different High Courts have taken different views of Explanation 2 to Section 28, the reasonable one is propounded by the revenue and that should be accepted. According to him, the submissions made by him also find support from the ratio of the Supreme Court judgment in the case of Devenport & Co. (P.) Ltd. v. CIT  100 ITR 715.
7. These submissions were strongly opposed by Shri D.S. Gupta, Advocate, learned counsel for the assessee, who in the very beginning submitted that the reference made by the learned departmental representative to the judgment of the Supreme Court in the case of Devenport & Co. (P.) Ltd. (supra) and the judgment in the case of Nand Lal Sohan Lal (supra) decided by the Punjab and Haryana High Court is inelevant and uncalled for. It was further submitted that the Bombay High Court in the case of Indian Commercial Co. (P.) Ltd. (supra) had clearly held that the use of plural "speculative transactions" in Explanation 2 to Section 28 clearly shows that in order to constitute "speculative business" within the terms of that Explanation, a single transaction would not be sufficient. In this view, it was submitted, the reference by the revenue to this judgment is misplaced. This judgment is against the revenue. It was further submitted that the Andhra Pradesh High Court had fully analysed the relevant provisions of Section 28, Explanation 2 thereto and Section 43(5) of the Act before coming to the decision that merely because it is a speculative transaction, it will not by itself render it speculative business for which there should be more than one speculative transaction carried on by the assessee as per Explanation 2 to Section 28. Referring to the judgment of the Madhya Pradesh High Court, relied on by Shri Khichi in support of his arguments, it was submitted that in any case, the judgments cited by the revenue itself show that on the interpretation of provisions of Explanation 2 to Section 28 with regard to the "speculative transaction", there are two reasonable views possible and when there are two reasonable views possible on the interpretation of fiscal provisions, it is well settled that one that favours the subject be adopted. It is, therefore, for our consideration whether, on the set of facts from which the issues before us emanate, there is any justification for an interference in the order of the AAC to grant the appeal of the revenue.
8. After very careful consideration of the rival submissions of both the sides and after perusal of the order of the Tribunal in IT Appeal No. 984 of 1976-77 dated 16-12-1978, we are of the opinion that a single transaction even if it is of speculative nature, does not by itself constitute a speculative business because of (not the) Explanation 2 to Section 28 which provides that where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as a "speculation business") shall be deemed to be distinct and separate from any other business. This definition of speculation business is in contrast to the definition of "business" given in Section 2 (13) of the Act which provides that business includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. Apparently, therefore, Explanation 2 to Section 28 of the Act is a special provision which gives different treatments in certain types of transactions, called speculation business. It is now trite law that where there are two independent provisions operating in the same field, one of them being special and the other being of general nature, the special provision takes precedence over the general provision on the well known principle of generalia specialibus non derogent. This maxim of interpretation provides that when there is a conflict in a general provision and a special provision operating in the same field, the special provision must be given effect to and the general enactment can only apply in respect of provisions not covered by the special or particular provisions. In this context, we find that there is a general provision with regard to the speculation business (sic). The interpretation and the definition of "business" under Section 2(73), in our opinion, cannot be availed of.
9. In view of what is stated above, it is clear that there is a conflict of judicial opinions on the interpretation of the words "speculative transactions" used in Explanation 2 to Section 28 and in these situations the interpretation in favour of the assessee must be accepted. We accept it and confirm the order of the AAC in this regard, thereby dismissing the appeal of the revenue.
11. The appeal of the revenue is dismissed and the cross-objection of the assessee is allowed.