Non-Speculative Business Loss can be set off against speculative Business Income

CIT Vs. M/S Ramshree Steels Pvt. Ltd (Allahabad High Court)

Issues Under Consideration

I. Whether the ITAT was correct in law and on facts in holding that non ­speculative business loss of current year and carry forward non ­speculative business loss of earlier years can be set off from the income of speculative business of the current years?

II. Whether the ITAT was in error in allowing loss in non ­speculative business to be set off from income of speculative business without appreciating that set off of loss against income is governed by and limited to provisions of Sections 72 and 73 in particular and Sections 70 to 80 in general which do not provide for set off loss of non ­speculative business against income from speculative business.

III. Whether the ITAT erred in law and in fact in failing to appreciate that Section 28 provides that a speculative business shall be deemed to be distinct and separate from any other business and this being the case loss from non ­speculative business could not be set off against profits of speculative business.

Held by High Court

Section 72 (1) of the Income Tax Act provides that the non ­speculative business loss can be set off against ‘profit and gains, if any, of any business or profession‘ carried on by assessee and assessable in that assessment year, and when it cannot be so set off, it shall be carried forward to the following assessment year.