2003 (1) TMI 69

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..... e case, the learned Income-tax Appellate Tribunal was justified in directing the Assessing Officer to compute the total income of the assessee without applying the provisions of Explanation to section 73 when the loss in share trading exceeded the income from other sources and the loss was a loss from speculative business contrary to the finding of the Income-tax Appellate Tribunal that the loss i .....

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..... ncome from other sources exceed the income of the assessee on other heads. From page 25, paragraph 3, of the order of the learned Tribunal, it appears that the income from other sources was Rs. 5,73,701 whereas the business income was Rs. 3,33,670. Upon such finding, the Tribunal had allowed the benefit of the Explanation to section 73 and had permitted setting off the business loss without treati .....

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..... rofit only. Speculation loss is not permitted to be adjusted against business profit. This restriction is relaxed and adjustment is made permissible by reason of the Explanation in respect of a company whose gross total income consists mainly of income chargeable under the heads specified. It is the gross total income, which is to be taken into account first. If this test is satisfied, then only s .....

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..... ere is hardly any difference in the definition of "income" in the 1961 Act with that of the 1922 Act. In the case of Eastern Aviation and Industries Ltd. v. CIT [1994] 208 ITR 1023, this court had held that the Explanation to section 73 could be applied before the principle of deduction is applied, namely after computing the income as defined under section 80B(5) of the said Act. Applying the sai .....

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..... spect of section 73 which in sub-section (1) makes it clear that speculation loss cannot be set off except against a speculative profit permissible of being carried forward for being set off in the subsequent years stretching to a period of eight years and not otherwise, unless the test of the Explanation is satisfied, which, in our opinion, is not being satisfied in the present case. Therefore, .....

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