TMI Blog2002 (8) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on those shares had been computed as being part of the assessee's income under the head "Other sources". - "business loss carried forward from earlier years can be set off against the dividend income derived from the shares held as stockin-trade". - The question referred to us is answered in favour of the assessee and against the Revenue. - - - - - Dated:- 19-8-2002 - Judge(s) : R. JAYASIMHA BABU., K. P. SIVASUBRAMANIAM. JUDGMENT The judgment of the court was delivered by R. JAYASIMHA BABU J.-The assessment years with which we are concerned are 1980-81 and 1981-82. The common question referred to us for consideration, at the instance of the Revenue, is "whether, on the facts and in the circumstances of the case, the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Where any assessee sustains a loss of profits or gains in any year, being a previous year, not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, in any business, profession or vocation, and the loss cannot be wholly set off under sub-section (1), so much of the loss as is not so set off or the whole loss where the assessee had no other head of income shall be carried forward to the following year, and (i) where the loss was sustained by him in a business consisting of speculative transactions, it shall be set off only against the profits and gains, if any, of any business in speculative transactions carried on by him in that year; (ii) where the loss was sustained by him in any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmissible only for a period of eight assessment years immediately succeeding the assessment year for which the loss was first computed as provided in sub-section (3) of section 72. The proviso to section 72(1)(ii) is not attracted to the facts of the present case and, therefore, no reference is being made thereto. In the case of Western States Trading Co. P. Ltd. [1971] 80 ITR 21 (SC), which arose under the Indian Income-tax Act, 1922, the court considered the right of the assessee to set off the dividend derived from shares held as trade assets against the loss computed under the head "Profits and gains of business or profession". The following passage in that judgment sets out the law which is required to be applied to this case: "On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng assets and the assessee would be entitled to a set-off as claimed against the loss from its business incurred during the previous years. It does not appear to have been disputed at any stage that the shares formed part of the stock-in-trade of the share dealing business of the assessee. There could be no reason, therefore, for the assessee not being entitled to the set off claimed. The High Courts have consistently taken the view that business loss carried forward from earlier years can be set off against dividend income derived from shares held as stock-in-trade (vide CIT v. Shrikishan Chandmal [1966] 60 ITR 303 (MP) and CIT v. Bhavnagar Trust Corporation (P.) Ltd. [1968] 69 ITR 278 (Guj)). The second question, therefore, should have be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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