Law:

Section:

Section 73, read with section 36(1)(vii) of the Income-tax Act, 1961 [Corresponding to Section 24(1) and Section 10(2)(xi) of the Indian Income-tax Act, 1922] - Assessment years 1958-59 and 1959-60 - Whether where an assessee has both speculative and non-speculative businesses, one or more than one of each kind, losses in speculative businesses of one kind can only be set off against profits, if any, in speculative business of another kind, but they will not be capable of being set off against profits from a non-speculative business - Held, yes FACTS For the Assessment year 1958-59, the assessee in its return claimed certain amount as bad debt on account of debtor "G". That amount included a sum representing profits made by the assessee in certain speculative transactions and were due to it from the said 'G' and were, therefore, debited to his account. Said sum were, however, not realized and ultimately in the relevant accounting year they were written off and claimed as bad debt along with the other dues form the said debtor. However, later the ITO reopened the assessment under section 34(1)(b ) of the Act, 1922 and disallowed the sum of bad debt on speculative business in the computation of the total income for that year and allowed it to be carried forward as a part of the speculative loss for the subsequent years. Assessee's appeal, against that order was dismissed by both the AAC and the Tribunal. In the assessment for the assessment year 1959-60, the assessee claimed an amount of Rs. 43.541.44 as a bad debt in the account of one 'M'. This amount represented the balance due to the assessee from the said 'M', in respect of certain speculative transactions entered into by the assessee with him. The dues having become irrecoverable, the assessee had written them off in the relevant accounting year and claimed them as a bad debt in the assessment. The ITO allowed only a sum of Rs. 3,044 out of the said amount, to be adjusted against the speculative profits, which amounted to that figure during the accounting year and directed that the rest of the amount of Rs. 40,497 be carried forward as loss in speculation in accordance with the provisions of section 24(1)…

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