Law: Income Tax Act, 1922

Section: 24(1)

Section 73 of the Income-tax Act, 1961 [Corresponding to section 24(1) of the Indian Income-tax Act, 1922] - Losses - In speculation business - Assessment years 1953-54 and 1955-56 - Whether losses suffered by an assessee in speculative transactions can be set off against profits from non-speculative business - Held, no Section 256 of the Income-tax Act, 1961 [Corresponding to section 66 of the Indian Income-tax Act, 1922] - High Court - Reference to - Assessment years 1953-54 and 1955-56 - Whether in a reference High Court cannot go behind finding of Tribunal nor it can raise any question suo motu - Held, yes - Whether section 66 of 1922 Act does not confer any jurisdiction upon High Court to decide a different question of law not arising out of reference order - Held, yes FACTS The assessee-company was carrying on the business of running factories for ginning and pressing cotton and for manufacturing oil and gram dal. During the accounting year relevant to the assessment years 1953-54 and 1955-56, the assessee was carrying on speculative transaction in forward buying and selling of sarso. In these speculative transactions the assessee sustained certain loss in the two periods. In computing the total income from business for each of the two years the assessee claimed that it was entitled to set off the losses in speculative transactions suffered in each of the two years under consideration against profits from non-speculative business. This contention of the assessee was repelled by the ITO by the AAC and finally by the Tribunal. On reference : HELD The function of this Court under section 66(1) is very much restricted. The High Court cannot be behind the finding of the Tribunal nor it can raise any question suo motu. The scope of jurisdiction of this Court under section 66(1) is circumscribed. Before a question can be raised it has to be shown that it was duly referred to the High Court under the provisions of section 66(1). The High Court may even be required to call upon the Tribunal to refer the matter under section 66(2) to it. It does not confer jurisdiction on the High Court to decide a different question of law not arising out of such order. On a true…

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