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Issues involved:
The judgment addresses the following Issues: 1. Whether the loss incurred by the assessee in the purchase and sales of shares can be treated as speculation loss or regular business loss under Section 70 & 71 of the Income Tax Act. 2. Whether the loss incurred by the assessee in the course of its business of dealing in shares can be treated as speculation loss within the meaning of explanation to Section 73. Issue 1: Loss treatment under Section 70 & 71: The Tribunal held that the loss incurred by the assessee on purchase and sale of shares should be treated as regular business loss, not speculation loss, and adjusted against other income under Section 73 of the Income Tax Act. The Tribunal based its decision on a previous ruling for the assessment year 1987-88. The Tribunal concluded that the explanation to Section 73 does not apply in this case, and therefore allowed the appeal. Issue 2: Interpretation of explanation to Section 73: The explanation to Section 73 states that if a company's business consists of the purchase and sale of shares of other companies, it shall be deemed to be carrying on a speculation business to the extent of such activity. However, this provision does not apply to companies whose gross total income mainly comprises specific types of income. In this case, the assessee's income falls under the heads of "loss of business" and "other sources," not the specified types of income. Therefore, the Tribunal was correct in its conclusion that the loss incurred in dealing with shares should be treated as regular business loss, not speculation loss. The Tribunal's decision was upheld, and the appeal was dismissed.
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