1991 (9) TMI 128 - AT - Income Tax

Summary

Issues:
1. Whether the loss claimed by the assessee on the sale of shares is allowable as a business loss or a speculative loss.
2. Whether the loss can be treated as "Short term Capital Loss" instead of a speculation loss.
3. Whether the claim under section 74 can be entertained when the case falls under section 73.

Detailed Analysis:
1. The assessee claimed a loss on the sale of shares, contending it was a business loss. However, the Income-tax authorities deemed it a speculation loss as the purchase and sale contracts were settled without actual delivery of shares. The Tribunal found no evidence of share delivery to the assessee, concluding it was a speculative transaction. Citing relevant case laws, the Tribunal upheld the speculation loss treatment, dismissing the assessee's claim for business loss deduction.

2. The assessee argued for treating the loss as "Short term Capital Loss" instead of speculation loss, but the Departmental Representative opposed, stating the claim was not raised earlier and should not be entertained without Tribunal permission. Additionally, it was argued that once a claim falls under a specific provision like section 73, considering it under another provision like section 74 is unwarranted. The Tribunal rejected the argument, emphasizing that speculation losses are governed by section 73, irrespective of the nature of the transactions.

3. The Tribunal clarified that section 73 applies to speculation losses where contracts are settled without actual delivery of goods, contrasting with capital asset acquisition. It highlighted that once a case falls under section 73, it cannot be considered under section 74. The Tribunal dismissed the argument that the number of transactions or the nature of trade affects the application of section 73. It concluded that the assessee's attempt to claim speculation loss against business income was not permissible under the law. The Tribunal dismissed the appeal, upholding the treatment of the loss as speculative and not allowable as a business loss.