Law: Income Tax Act, 1922

Section: 24

Income-tax Act (XI of 1922)---S. 24--Speculative business--Definition--Dealing in bonus voucher, whether speculative transaction--Loss--Set off--Where the speculative transactions are incidental to the regular business of the assessee and not in the nature of business, he will be entitled to have the amount of loss set off against his income, profits or gains under any other head in that year. The dealings in bonus voucher were incidental to the business of the assessee. The earning of bonus voucher was co-related to the export and its sale could not be avoided by the assessee. The dealings in bonus voucher was naturally attached to the business and has become its concomitant. Where any assessee sustains any loss of profit or gain in any year "he shall be entitled to have the amount of loss set off against his income, profit, or gain under any other head in that year". The first proviso to section 24 is an independent provision, which provides that where the assessee is engaged in speculative transaction which are in the mature of business such transaction shall be deemed to constitute a business distinct and separate from any other business carried on by the assessee and any loss sustained by him in such business shall be set off only against the income profit and gains of that business. Therefore, if speculative transactions are not in the nature of business, loss sustained in such dealings shall be set off from the income profit and gain under any other head. The word speculative business has been defined in Explanation 1 to section 24. However, for arguments sake if it is accepted that the dealing in bonus voucher is in the nature of speculative transaction them the first proviso to Section 24 will be applicable, if it is further established [hat such speculative transaction is in the nature of the business of the assessee. Unless it is established the first proviso to S. 24 will riot apply. If the assessee carried on speculative transactions and dealings, which are in the nature of his business then loss resulting from such speculative business/ dealing will be set off against speculative income and gains. But where the speculative transactions are…

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