Law: Income Tax Act (XI of 1922)

Section: 10

Income tax Act (XI of 1922)---   ---- Ss. 10 (1), 24 (1), first proviso Business Speculation Loss Set off against other profits Interpretation of Statutes Proviso.   Even if the principal part of section 24 (1) of the Income tax Act, 1922 is not invoked by the assessee for the purpose of the set off of loss arising from speculative transactions against other business profits, and he seeks to rely upon the adjustment of profits and losses under the main head of business by the computation of income under section 10, the first proviso to section 24 (t) controls such set off for the reason that it directs that in computing profits under the head of business, losses sustained in speculative transactions shall be dealt with separately in a special way. The fact that this proviso, though it affects section 10 of the Act, has been placed under section 24 (1), does not mean that it has no real application to section 10 and that it controls only the main part of section 24 (1) :   Held, accordingly, that the assessee was not entitled to set off the loss arising from speculative transactions against his other business profits for the assessment year 195354.   Keshavlal Premchand v. Commissioner of Income tax (1957) 31 I T R 7 fol.   Commissioner of Income tax v. Indo Mercantile Bank Ltd. (1959) 36 I T R 1 and Commissioner of Income tax v. Ramgopal Kaniyalal (1960) 38 I T R 193 ref. JUDGMENT   SRINIVASAN, J. The question that is raised in this reference is the extent to which loss arising from speculative transactions can be set off. The assessee who is a regular dealer in zinc and metal ingots returned an income of Rs. 7,796 for the assessment year 1953 54 after setting off a loss of Rs. 23,162 in two transactions with one Muralidhar Bhagwandas of Bombay. It is not disputed by the assessee that these were speculative transactions, that is to say, that they were forward transactions in zinc and tin ingots which did not involve and which was definitely not even intended to involve any delivery of the goods. The transactions were settled by mere payment of differences. On this point there is no dispute, and the Income tax Officer definitely…