Law: Income Tax Act, 1922

Section: 24(1)

JUDGMENT R.S. Pathak, J.-The assessee, which is a registered firm, carried on business in grain and also entered into certain transactions in respect of sarson. During the assessment proceedings for the assessment year 1957-58, the assessee claimed that the losses from the transactions in sarson should be adjusted against the profits from its other business. It alleged that the adjustment should be allowed because the transactions were hedging transactions. The Income-tax Officer, however, found that the transactions were not hedging transactions but were speculative transactions and by reference to the proviso to section 24(1) held that the assessee was not entitled to an adjustment of the losses from those speculative transactions against the profits of the other business. This finding was upheld by the Appellate Assistant Commissioner and thereafter by the Income-tax Appellate Tribunal. The Appellate Tribunal has, upon these facts, referred the following question : "Whether on a true interpretation of sub-section (1) of section 24 of the Indian Income-tax Act, the losses of Rs. 6,129…

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