1980 (9) TMI 12 - HC - Income Tax

Summary

Issues involved: Determination of whether brokerage income on purchase and sale of speculative business constitutes speculation income.

Summary:
The case involved an individual assessee engaged in brokerage and purchase/sale of jute and hessian goods. The Income Tax Officer (ITO) classified the business as speculation due to transactions settled without actual delivery, but distinguished brokerage income as non-speculative. The Appellate Authority Commissioner (AAC) considered brokerage as part of speculation business. The Appellate Tribunal upheld AAC's decision, treating brokerage as speculation income. The High Court referred the question of law u/s 256(1) of the I.T. Act, 1961, regarding the nature of brokerage income in speculative business. Citing the Supreme Court case of CIT v. Pangal Vittal Nayak & Co. Pvt. Ltd., the High Court held that commission income, like brokerage, not subject to market fluctuations, cannot be considered speculation income. Consequently, the Tribunal's decision was upheld in favor of the Revenue. Each party was to bear its own costs. The request for leave to appeal to the Supreme Court was dismissed.

SABYASACHI MUKHARJI J.:
The assessee's brokerage income on speculative business was a key point of contention. The High Court, drawing from the Supreme Court precedent, clarified that income like commission, not influenced by market fluctuations, should not be categorized as speculation income. Therefore, the Tribunal's decision treating brokerage as speculation income was upheld, favoring the Revenue.

SUDHINDRA MOHAN GUHA J.:
Agreed with the decision made by SABYASACHI MUKHARJI J.