Law:

Section:

Section 73, read with section 28(i), of the Income-tax Act, 1961 - Losses - In speculation business - Assessment year 1962-63 - Whether assessee-company was entitled to set off loss in respect of illegal forward transaction against its other business income - Held, no FACTS The assessee-company was engaged in the business of purchasing groundnuts, crushing them, produce groundnut oil and selling the same as well as the oil cakes. It incurred a loss, being the amount of difference paid in the various forward contracts entered into with its customers. The ITO found that the said loss was incurred in settlement of the transactions in which no delivery of the goods was actually taken or made. He thus held that these were illegal speculative transactions which were prohibited by the Forward Contracts (Regulation) Act, 1952, and that the loss from the illegal speculative transactions could not be deducted from the other income. The ITO, therefore, disallowed the loss claimed by the assessee. The Tribunal held that having regard to the fact that all the transactions were to be found from the same books of accounts of the assessee, prima facie the transactions in question related to the same business as was carried on by the assessee. The Tribunal also noted that the income-tax department had not been able to establish that the two businesses were distinct. In that view of the matter, it relied upon the decision of the Supreme Court in Commission of Income-tax v. S.C. Kothari [1971] 82 ITR 794, and held that the assessee was entitled to set off the said loss against its other business income. On reference; HELD The reading of the of the Supreme Court in CIT vs. S.C. Kothari (Supra) in the manner in which it had been done by the Tribunal and which was sought to be justified by the assessee, was not permissible. To read such a broad proposition in the would result in upsetting all the known and settled legal principles and it would introduce certain new concepts which are irrelevant and alien to the income-tax law. The Supreme Court in that case was merely dealing with an appeal by the revenue only on the limited question, whether the assessee in that case was entitled…

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