Law:

Section:

Section 71 of the Income-tax Act, 1961 [Corresponding to section 24 of the Indian Income-tax Act, 1922] - Losses - Set off of from one head against income from another - Assessment year 1953-54 - Whether speculation losses can be set off against profits from any other business activity under section 10 of 1922 Act in spite of first proviso to section 24(1) of 1922 Act - Held, no FACTS The assessee derived income from property, shares in joint stock companies and commission agency business and shares in partnership firms. For the assessment year 1953-54, the assessee returned certain loss, which included the loss suffered n speculative dealing in silver paid through the firm. The ITO disallowed the set-off loss. On second appeal the assessee contended before the Tribunal that the carry forward net loss from the speculative dealing be set-off against profit from other business. The Tribunal rejected the assessee's contention. On reference the High Court allowed the assessee's claim. On appeal to the Supreme Court : HELD Where the language is quite clear and no other view is possible, it is futile to go into the question whether the proviso to section 24(1) operates as a substantive provision or only by way of an exception to section 24(1). The proviso says in unmistakable and unequivocal terms that any losses sustained in speculative transactions which are in the nature of a business shall not be taken into account except to the extent of the amount of profits or gains in any other business consisting of speculative transactions. This has to be read withExplanation (1) according to which where the speculative transactions carried on are of such a nature as to constitute a business the business shall be deemed to be distinct and separate from any other business. The High Court was therefore not justified in holding that speculative losses can be set off against profit from any other business activity under section 10 in spite of the first proviso to section 24(1). Note : The case has been decided in favour of the revenue. CASE REVIEW Keshavlal Premchand v. Commissioner of Income-tax [1957] 31 ITR 7 approved. Decision of the Allahabad High Court in Jagannath…

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