Law:

Section:

Section 71 read with section 28(i) of the Income-tax Act, 1961 [Corresponding to section 24(1), read with section 10, of Indian Income-tax, 1922] - Losses - Set-off of from one head against income from another - Assessee-firm was a member of Forward Exchange and carried on speculation business - Whether assessee was not entitled to claim a set-off of loss suffered by its speculation business against commission income as businesses of speculative transactions and commission agency were separate distinct businesses - Held, yes FACTS The assessee-firm was a member of Forward Exchange and carried on speculation business in grains, silver, cotton, etc. on his account. It received large amounts of commission in regard to forward transactions and incurred loss in speculation business. The assessee sought to set off this loss against the commission income. The ITO rejected the assessee's claim. On appeals, the AAC as well as the Tribunal dismissed the assessee's appeals. On reference : HELD In the case of CIT v. Ramsarup [1962] 45 ITR 248, the Full Bench held that on a true interpretation of section 10 and sub-section (1) of section 24 and the first proviso thereto, an assessee is not entitled to claim a set-off of the loss suffered by him in speculation business against the profits of the assessee in a business other than a business consisting of speculative transactions. Following the above decision, if the speculation transactions were separate and distinct from the commission agency business, the losses arising from speculative transactions had been properly disallowed and carried forward. There was such material, on which the Tribunal had based its finding that the two business of speculative transactions and commission agency, were separate and distinct business. Further, the Tribunal was right in its conclusion that the true profit and loss of a transaction could only be worked out after allowing the commission paid in that transaction and, therefore, the speculative profits and losses could only be worked out after debiting the commission paid. Therefore the commission payment made on the assessee's speculative transactions, formed a direct charge and,…

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