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March 2014

Speculative transaction: Loss: Set off: Section 73: A. Y. 1991-92: Loss on account of purchase and sale of shares from solitary transaction: Transaction not constituting business carried on by assessee: Loss can be set off against profits from other sources:

By K. B. Bhujle Advocate
Reading Time 1 mins
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CIT vs. Orient Instrument P. Ltd.; 360 ITR 182 (Del):

The assessee company was engaged in the business of trading in crafts paper, installation, job work, consultancy and commission. In the relevant year it incurred loss of Rs. 5,53,500/- on account of a transaction whereby it purchased and sold shares. The assessee claimed set off of the said loss against other income. The Assessing Officer disallowed the claim for set off of the loss holding that the loss is speculation loss. The Tribunal allowed the assessee’s claim.

On appeal by the Revenue, the Delhi High Court upheld the decision of the Tribunal and held as under:

“i) The transaction whereby the assessee purchased the shares and incurred loss on account of fall in the value of the shares was a solitary one.

ii) The finding of the Tribunal that the transaction did not constitute the business carried on by the assessee, could not be termed perverse and unreasonable. The appeal is accordingly dismissed.”

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