Speculation Income

This query is : Resolved

CA. Jyoti Baid (Querist)
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16 April 2009 Hello sir,

A company whose principal business is purcahse and renting of properties has not generated any income in this year. But the general office, legal, preliminary exps w/off are debited to P/L amounting to Rs. 66000/-

Now the company earns speculation income by way of commodity difference amt to Rs.56000/- and interest on loan of Rs. 15000/-.

Which is the correct option:
1.Take the deduction of all expenses from speculation income,then speculation loss will be (66000-56000)10000/- which cannot be st off against int. on loan. Hence Total income - 15000
2.Show the loss from business as Rs.66000/- which could be set off with int on loan and Rs.56000 as speculation income. Total income-5000

Regards,
Jyoti Baid

Deepak Goel

Deepak Goel (Expert)
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16 April 2009 Yes, business loss can be set off against speculation income but speculation loss cannot be set off with other income.

CA. Jyoti Baid

CA. Jyoti Baid (Querist)
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17 April 2009 Thank you for the reply.
But please tell me the correct option as total income will vary in the above mentioned 2 options.

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CA. Jyoti Baid

CA. Jyoti Baid (Querist)
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02 June 2009 .

CA Shail Mishra

CA Shail Mishra (Expert)
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03 June 2009 In the given case u have to follow second option only .Position would be as follows-

1. Income u/s PGBP
Normal- (66000)
Speculative- 56000
2. Income u/s Other Sources-15000

Loss u/h PGBP after intra head ad. – 10000
Income after inter head adjustment- 15000-10000=5000- Total Income

As u said u can not follow first option becaz –

1- For the purpose of computation Normal Business and Speculative is diff. frm each other
2- No expenses can be claimed against the income of Speculative business.

Anyway this option is more beneficial.