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2007] 292 ITR 3 [2007] 163 TAXMAN 187 (SC) SUPREME COURT OF INDIA Commissioner of Income-tax * v. Sharwan Kumar Agarwal MRS. RUMA PAL, DR. ARIJIT PASAYAT AND C.K. THAKKER, JJ. CIVIL APPEAL NO. 3618 OF 2003 FEBRUARY 8, 2005 Section 43(5) of the Income-tax Act, 1961 - Speculative transactions - Assessing Officer had found that net loss suffered by assessee, a share broker, arose in a speculative transaction within meaning of section 43(5) and invoking provisions of section 73, disallowed its set-off against profit of assessee's general business - Tribunal held that assessee was entitled to exception covered by proviso (c) to clause (5) of section 43 and rejected revenue's reference application - On an application under section 256(2), High Court rejected said application on ground that onus of proof was on department to establish that such exception was not applicable and department had not shown any material against assessee's entitlement to said exception - Whether appeal of revenue against order of High Court, holding that no question of law was required to be referred, was rightly rejected, however, for other reasons - Held, yes FACTS In the course of assessment proceedings, the Assessing Officer found that the assessee, a share broker, had at times settled the share transactions by corresponding deliveries and at times settled the contract without effect-ing the delivery and thereby incurred a net loss. The Assessing Officer holding it to be a speculative transaction within the meaning of section 43(5), disallowed the speculative loss to be set-off against the profit…

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