Law:

Section:

Section 73(1) of the Income-tax Act, 1961 - (Corresponding to section 24(1) of the Indian Income-tax Act, 1922) - Loss - In speculation business - Whether where contracts for delivery of goods could not be fulfilled and transactions were settled on basis of difference between contract rate and prevailing market rate, such transaction was a speculative transaction within meaning of Explanation 2 to section 24(1) of 1922 Act and loss sustained by assessee in such a transaction would be speculation loss - Held, yes - Whether said speculation loss could not be set off against income of other business activities of same year - Held, yes FACTS The assessee was dealing in oil & oil cakes etc. In respect of its business it used to purchase oil and oil cakes in bulk by entering into contracts with mills. For various reasons the contracts for delivery of certain goods were not fulfilled. The transactions were settled on the basis of difference between the prevailing market rate and the contractual rate. In this way the assessee suffered loss in the previous year relevant to the assessment year 1960-61, which it sought to set off against profits earned from ready business during that same year. The ITO however, held that these were speculation losses which could be adjusted against the profits of speculation business. On appeal the AAC upheld the order of the Income-tax Officer. On second appeal, the Tribunal came to the conclusion that the losses suffered by the assessee were speculation losses but could be set off against the profits of other business of the assessee. On reference : HELD There was no dispute that the transactions were ultimately settled otherwise than by actual delivery or transfer of the commodity. It was, therefore, clear that the transaction in question was a speculative transaction within the meaning of section 24(1), Explanation 2, and the loss suffered by the assessee was a speculation loss. So far as the question, whether speculation loss could be set off against the profits of non-speculative business was concerned, in view of decision of the Supreme Court in the case of CIT v. Jagannath Mahadeo Prasad [1969]71 ITR 296 (SC) it was was to be…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492