TMI Blog1991 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 70 of the Income-tax Act, 1961, against the current business loss of the assessee before adjustment under sub-section (2) of section 73 of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in upholding the Commissioner of Income-tax (Appeals)'s order that speculation profit of the current year should first be adjusted against the speculation loss of earlier years and not against the current year's business loss ?" Shortly stated, the facts are as under : The assessee is an investment company. During the year, the assessee earned speculation profit of Rs. 4,60,475. The Assessing Officer adjusted the speculation profit of the assessee against the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of an assessee is a separate and distinct business and the loss earned under this head should be separately treated. The speculative loss is only available for set off against the speculative profit of the year or against that of the subsequent years. Section 73 is very clear and, therefore, the Commissioner of Income-tax (Appeals) was justified in allowing the claim of the assessee. The Tribunal after considering the submission of the parties held that the speculative profit of the assessee was not available for set off against the other income of the assessee for the year. Under the said circumstances, the Tribunal held that the finding of the Commissioner of Income-tax (Appeals) was in accordance with the provisions of section 73 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orward of the loss of Rs. 28,662. This decision has no application to the facts of this case. In that case during the relevant period, capital gains, whether on the positive or the negative side, could not be computed and charged under section 12B or any other provisions of the 1922 Act. There, the Supreme Court observed at page 126 of 99 ITR as follows "....during the period section 12B did not make income under the head 'Capital gains' chargeable, an assessee was neither required to show income under that head in his return, nor entitled to file a return showing 'capital losses' merely for the purpose of getting the same computed and carried forward. Sub-section (2A) of section 22 would not give him such a right because the operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion the Bombay High Court relied on a circular of the Board dated September 12, 1960. In that case in the assessment for the assessment year 1958-59, the assessee claimed that the carried forward losses should be first set off against the speculation profits of the current year ; but the Tribunal held that the profit or loss of the current year should be first arrived at under section 10 of the Indian Income-tax Act, 1922, before setting off the carried forward loss under section 24(2). There, the Bombay High Court relied on the aforesaid circular dated September 12, 1960, and observed as follows (at page 738) : "This circular relates to adjustment of speculation profits in the current year against the carried forward speculation loss. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation losses for the earlier years are carried forward and if in the year of account speculation profit is earned by the assessee then the circular provides that such speculation profits for the accounting year should be adjusted against the carried forward speculation loss of the previous year before allowing any other loss to be adjusted against those profits. In view of this circular the position is beyond any doubt so far as the present question is concerned. " Section 73 of the Act provides that any loss, computed in respect of speculation business carried on by an assessee, will not be set off except against profits and gains, if any, of another speculation business. Further, where any loss, computed in respect of speculation busin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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