Law:

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Section 56 of the Income-tax Act, 1961 - Income from other sources - Chargeable as - Assessment year 1964-65 - Whether in view of decision of Supreme Court in CIT v. Pangal Vittal Nayak & Co. (P.) Ltd. [1969] 74 ITR 754 (SC), brokerage received by assessee on its speculative business of sale and purchase of jute and hessian goods, could not be treated as income of speculative nature - Held, yes - Whether, therefore, loss suffered by assessee in speculative business could not be set off against income received as brokerage - Held, yes FACTS The assessee was carrying on the business of brokerage and purchase and sale of jute and hessian goods. The ITO found that both the purchase and sale transactions in the business of jute and hessian goods were settled otherwise than by actual delivery. He, therefore, treated the business of purchase and sale of jute and hessian goods as speculation business. The ITO however, further held that the income from brokerage on the purchase and sale of jute and hessian goods could not be treated as speculation income, since it was a business apart from speculation in jute and hessian goods. The result was that the net speculation loss was carried forward and not set off against the net brokerage income. On appeal, the AAC held that the receipts and payments of brokerage should also be treated as part of the speculation business, and therefore, loss suffered in speculation business could be set off against the brokerage income the Tribunal confirmed the order of the AAC. On reference : HELD In view of decision of the Supreme Court in the case of CIT v. Pangal Vittal Nayak & Co. Pvt. Ltd.[1969] 74 ITR 754 (SC), it was to be held that the Tribunal was not justified in holding that the brokerage on the purchase and sale of the assessee's speculative business of purchase and sale of pucca delivery orders and mata's receipts was of a speculative nature. Note : Reference was answered in favour of the revenue. CASE REVIEW CIT v. Pangal Vittal Nayak and Co. P. Ltd.[1969] 74 ITR 754 (SC) followed and relied upon. CASES REFERRED TO CIT v. Pangal Vittal Nayak & Co. (P.) Ltd.[1969] 74 ITR 754 (SC). JUDGMENT Sabyasachi Mukharji,…

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