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Issues Involved:
1. Whether the speculation loss can be set off against the profit from any other business activity under section 10 in spite of the first proviso to section 24(1). Detailed Analysis: Issue 1: Set-off of Speculation Loss Against Other Business Profits Background: The assessee, an individual, reported income from various sources including property, shares, commission agency, and partnerships. For the assessment year 1953-54, the assessee claimed a net profit after setting off a speculative loss of Rs. 8,669 from one of the partnership firms. The Income-tax Officer ignored this loss. However, the Appellate Assistant Commissioner recognized a net speculative loss of Rs. 7,254 and directed it to be carried forward for future set-off against speculative profits. The Appellate Tribunal denied the set-off of this speculative loss against other business profits, relying on the first proviso to section 24(1). Legal Provisions: - Section 10(1): Specifies that tax is payable on profits and gains from business, profession, or vocation. - Section 24(1): Allows setting off losses under one head of income against profits under another head within the same year, with certain provisos. Contentions: - Assessee's Argument: The proviso to section 24(1) should not affect the computation of profits and gains under section 10. It should only apply when section 24(1) is invoked. - Commissioner's Argument: The proviso should be considered during the computation of profits and gains under section 10. Court's Analysis: The court examined the interplay between sections 10 and 24(1). It noted that section 10 deals with the computation of profits and gains from business, while section 24(1) addresses the set-off of losses across different heads of income. The court emphasized that these provisions operate at different stages of the assessment process. - Section 10: Applied during the computation of business profits. - Section 24(1): Applied after computing profits under various heads to set off losses. The court found that the proviso to section 24(1) limits the set-off of speculative losses only against speculative profits. This limitation is relevant when applying section 24(1) and not during the initial computation under section 10. Therefore, the court concluded that the proviso does not affect the computation of business profits under section 10. Judgment: The court held that the proviso to section 24(1) does not apply to the computation of business profits under section 10. Consequently, the speculation loss cannot be set off against other business profits under section 10. The question referred was answered in the affirmative, supporting the assessee's contention. Conclusion: The court directed that a copy of the judgment be sent to the Income-tax Appellate Tribunal and awarded costs to the assessee, assessed at Rs. 200. Final Ruling: - Question Answered: In the affirmative. - Costs Awarded: Rs. 200 to the assessee.
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