Law: Income Tax Act, 1922

Section: 10(2)(xv)

Section 37(1) of the Income-tax Act, 1961 (Corresponding to section 10(2)(xv) of the Indian Income-tax Act, 1922) - Business expenditure - Allowability of - Assessment year 1953-54 - Whether assessee is entitled to deduction of speculation loss in computation of business income under section 10 of 1922 Act - Held, yes FACTS The assessee was a registered firm carrying on business in ready bardana and sutli and also engaging in speculative transactions. During the assessment proceedings it claimed to adjust the losses in speculative transactions sustained by it against the profits from its other business for the purpose of determining the profits and gains under section 10. This claim was negatived by the ITO, and an appeal before the AAC and, subsequently, a second appeal before the Income-tax Appellate Tribunal were both dismissed. On reference : HELD It had been held in Jagannath Mahadeo Prasad v. CIT [1965] 55 ITR 501, that an assessee was entitled to a deduction of the loss in speculative transactions while computing the profits and gains under the head 'Profits and gains from business' under section 10. In view of aforesaid decision of the Court, it was to be held that the assessee was entitled to deduction of speculative loss in computation of business income under section 10 of 1922 Act. Note : The case was decided in favour of the assessee. CASES REFERRED TO Jagannath Mahadeo Prasad v. CIT [1965] 55 ITR 501 (All.). JUDGMENT Pathak, J.-This is a reference under section 66(1) of the Indian Income-tax Act referring the following two questions for decision: "(1)Whether the first proviso to sub-section (1) of section 14 of the Income-tax Act was intra vires of Parliament? (2)Whether, on a true interpretation of the first proviso to section 24(1), the…

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