Law: Income Tax Act, 1922

Section: 24(1)

Law: Income Tax Act, 1922

Section: 24(1)

Section 28(i), read with section 73(1) of the Income-tax Act, 1961 [Corresponding to section 10 read with section 24(1) of the Indian Income-tax Act, 1922] - Business loss - Allowable as - Assessment years 1950-51, 1952-53 and 1953-54 - Assessee-company was dealing in business in shares, brokerage, money-lending, dividend, business in cloth and business in cotton waste - Assessee incurred losses in speculative business on deferred shares and claimed right to deduct said losses against profits from other business arose in relevant assessment years - Whether in view of decision of High Court in Jagannath Mahadeo Prasad v. CIT [1965] 55 ITR 501, loss in speculation dealings in shares could be set off against profits in other businesses for purpose of computing profits and gains of business under section 10(1) of 1922 Act and proviso to section 24(1) has no application - Held, yes - Whether therefore loss in deferred shares was an admissible deduction in determination of net income, profits and gains from business under section 10 of 1922 Act - Held, yes FACTS The assessee was the private limited company deriving income from business in shares, brokerage, money-lending, dividends, business in cloth and business in cotton waste. In the assessment years 1948-49, 1951-52 and subsequently, the assessee did not do any business in cloth and any business in cotton waste in the assessment years 1948-49 up to 1951-52. In the assessment years 1948-49, 1949-50 and 1951-52 it suffered losses of Rs. 96,793.00, Rs. 58,069.00 and Rs. 1,26,000 respectively in share business however, made profits in the other assessment years. In the assessment year 1953-54, it also carried on a business in speculation by purchasing and selling deferred shares of a certain company. It suffered a loss of Rs. 21,881.00 in the transaction. The assessee claimed the right to deduct the above-mentioned losses suffered by it from the profits of the assessment-years in question. In respect of the loss of Rs. 21,881 in speculative business, the Tribunal held that it could not be set off against the profits from other heads of income. As to whether the loss of Rs. 96,793, Rs. 58,669 and Rs. 1,126 in the…

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