CA Sanjay Baheti (PROPRIETOR) (1155 Points)
07 May 2010A Profit on sale of Listed Shares of companaies without actual delivery is deemed to be speculative profit by virtue of section 43(5) of I.T.Act.
My query is whether such speculative profit/gain can be set-off /adjusted against non-speculative business loss in the same asstt. year or not.
please reply with cited case law.
Aditya Maheshwari
(CA in Practice)
(35867 Points)
Replied 07 May 2010
Not allowable as per Section 73
Losses in speculation business.
7073. (1) Any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits and gains, if any, of another speculation business.
(2) Where for any assessment year any loss computed in respect of a speculation business has not been wholly set off under sub-section (1), so much of the loss as is not so set off or the whole loss where the assessee had no income from any71 other speculation business, shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and—
(i) it shall be set off against the profits and gains, if any, of any speculation business carried on by him assessable for that assessment year ; and
(ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on.
(3) In respect of allowance on account of depreciation or capital expenditure on scientific research, the provisions of sub-section (2) of section 72 shall apply in relation to speculation business as they apply in relation to any other business.
(4) No loss shall be carried forward under this section for more than 72[four] assessment years immediately succeeding the assessment year for which the loss was first computed.
73[Explanation.—Where any part of the business of a company (74[other than a company whose gross total income consists mainly of income which is chargeable under the heads “Interest on securities”, “Income from house property”, “Capital gains” and “Income from other sources”], or a company the principal business of which is the business of banking or the granting of loans and advances) consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares.]
CA Sanjay Baheti
(PROPRIETOR)
(1155 Points)
Replied 07 May 2010
Dear Mr. Maheshwari, In my Query there is no Speculative loss in the same asstt. year.
Please again comments.
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 07 May 2010
Look, for the time being, i dont have any case law...
But, any speculative loss can be adjusted against any speculative profit only...
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 07 May 2010
(i) it shall be set off against the profits and gains, if any, of any speculation business carried on by him assessable for that assessment year ; and
(ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on.
In above, it is clearly mentioned, either it should be set off against speculation gain only or should be carried forward.. In that asst year only....
praveen
(Chartered Accountant)
(6971 Points)
Replied 07 May 2010
Yes, Business Loss can be adjusted with Speculative gains in the same assessment year and brought forward business loss can also be adjusted with the speculative gains . However speculative losses have to be adjusted only with speculative gains.
Amir
(Learner)
(4016 Points)
Replied 07 May 2010
Dear Sir,
Agree with friend Praveen.
Non speculative loss - set off/carry forward & set off against Speculative as well as non speculative profits.
But Speculative loss cannot be adjusted with non speculative profits.
chetan Loknathka
(student)
(102 Points)
Replied 12 June 2010
hey speculation loss cannot setoff aginst profit other than speculation but loss of other business other than speculation can be setoff agianst loss and speculation loss carry forward only 4 years but filiing of return of income tax should be submit date of income tax act 1961 sec. 139 (1) than we carry forward upto 4 yrs
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