2004 (7) TMI 25 - HC - Income Tax

Speculation loss - carried forward and set off against any income of any other speculation business revenue pointed out that in view of sub-section (1) of section 73 this speculation loss could be set off against an income from another speculation business nor from the same business Held that This is a case which comes within the purview of sub-section (2) of section 73 under which this speculation loss of the previous year 1996-97 could be brought forward in the year following viz. 1997-98 and be set off against the income from any speculation business which includes the same speculation business but carried on in the year following (1997-98) against which the loss for the year 1996-97 could be set off. - In this case sub-section (1) of section 73 does not apply.

Summary

Issues:
Interpretation of provisions under section 73 for setting off speculation losses against income from speculation business in different assessment years.

Analysis:
The judgment involves a case where the assessee had a business in iron and steel along with a speculation business incurring losses. The issue at hand was the adjustment of speculation losses against income from speculation business for different assessment years. The contention raised by the appellant's counsel regarding the set off of speculation losses was deemed fallacious by the court. The court referred to sub-section (1) of section 73, stating that speculation losses can be set off against income from another speculation business in the same previous year. It clarified that there cannot be income and loss together in one speculation business for a specific previous year.

The court further elaborated on sub-section (2) of section 73, emphasizing that speculation losses from a particular previous year can be carried forward to the subsequent year and set off against income from any speculation business in the following assessment year. The word "any" in sub-section (2) was interpreted inclusively, allowing the set off against income from the same speculation business or any other speculation business carried on by the assessee in the following year. In the present case, the court determined that sub-section (1) of section 73 did not apply, and the situation fell under sub-section (2) where the speculation loss from the previous year could be carried forward and set off against income from any speculation business in the subsequent year.

The court concluded that the income-tax authority's decision was appropriate, and no substantial question of law arose in the case. As a result, the appeal was dismissed, and all parties were instructed to act on a signed xerox copy of the order. The concurring judge, R.N. Sinha, agreed with the judgment, affirming the dismissal of the appeal.