Law:

Section:

Section 73 of the Income-tax Act, 1961 - Losses - In speculation business - Assessment year 1997-98 - Assessee-company engaged in business of trading in metal and shares suffered loss in its share business and claimed set-off of said loss against profit earned from its other business - Assessing Officer disallowed claim of assessee by invoking provisions of section 73 read with its Explanation - Assessee contended that company was also engaged in business of granting loan and advance as defined in Explanation appended to section 73 and, hence, fell in excluded categories of company for purpose of inapplicability of section 73 - Whether since objects of memorandum and articles of association of company clearly showed that main business of assessee was trading in metal and shares and not granting advances/loans, no benefit of excepted category could be granted to assessee - Held, yes - Whether in those circumstances, loss suffered by assessee in share business being in nature of speculative business by deeming fiction contained in Explanation to section 73, it could not be set off against profit earned by assessee from non-speculative business - Held, yes FACTS The assessee-company was engaged in the business of trading in the metal and shares. In the relevant assessment year, the assessee suffered loss in its share business and claimed set-off of said loss against the profit earned from other business. The Assessing Officer held that the assessee was not entitled to claim the set-off of the loss suffered by it in the share business by virtue of section 73, read with itsExplanation. The assessee contended that the company was also engaged in the business of granting loans and advances as defined in theExplanation appended to section 73 and, hence, fell in the excluded categories of company for the purpose of inapplicability of section 73 and, accordingly, was entitled to the claim. The Assessing Officer, however, rejected the contention of the assessee and disallowed its claim. On appeal, the Commissioner (Appeals) upheld the action of the Assessing Officer. On further appeal, the Tribunal allowed the claim of the assessee for the set-off of loss from the…

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