NDLI: Sk. Ar. K. Ar. Somasundram Chettiar and Co. Madurai Vs. Commissioner of Income Tax. Madras

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Income Tax Act
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Indian Income-tax Act, 1922 (11 of 1922)
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Dismissed
Headnote	Income Tax Act, 1922-Section 24, third proviso, clause (a)-Requirements under-Contract--Construction, contract spoken in first part and in second part--Co-relation. When the clause applies to speculative transaction, indicated. Income Tax Act, 1922-Section 24, third proviso, clause (a}-Transactions entered into by assessee whether saved under. The appellant-assessee, was a registered firm. It was carrying on business in cloth and yarn. Its cloth business consisted mainly in Gada manufactured by certain Mills. The Income Tax Officer while making the assessment relating to the assessment years of 1960-61 and 1961-62, held that the losses of Rs. 2,04,746 and Rs. 17,000 respectively sustained by the assessee in the two assessment years constituted losses in speculative transactions in the nature of business and, therefore, could not be set off except against profits from speculation. He carried forward the said loss to be set off against speculation profits, if any, in subsequent assessment years. The assessee's appeal was dismissed by the Appellate Tribunal, though its further appeal to the Tribunal was upheld. Before the Tribunal, the assessee, conceding that the transactions in question are speculative transactions within the meaning of the Explanation 2 to section 24, Income Tax Act, 1922, contended that the transactions in question were saved under clause (a) of the proviso to F Section 24 of the Act. The Tribunal held that the transactions entered into by the assessee were in the nature of the hedging contracts and, therefore, saved under clause (a) of the proviso. The Revenue obtained a reference to the High Court on the question, ''whether on the facts and in the circumstances or the case, the transactions resulting in the loss of Rs. 2,04,746 in the previous year relevant for the assessment year 1960-61 and in the loss or Rs. 17,000 in the assessment year 1961~62 were saved from being treated as speculative transactions by clause (a) or the third proviso to Section 24(1) of the Income Tax Act, 1922." The assessee conceding that the transactions in question were speculative transactions, contended before the High Court that the transactions were saved by clause (a) of the third proviso to Section 24 . The High Court answered the reference in negative, i.e., in favour of the Revenue, holding that the transactions in question were not saved by clause (a) of the third proviso. The assessee-appellant challenged the view taken by the High Court in these appeals by special leave. D On the question, whether the transactions in question were saved by clause (a) of the third proviso to Section 24 of the Income Tax Act, 1922,
Judge	Hon'ble Mr. Justice B.P. Jeevan Reddy
Neutral Citation	1992 INSC 9
Petitioner	Sk. Ar. K. Ar. Somasundram Chettiar And Co. Madurai
Respondent	Commissioner Of Income Tax. Madras
SCR	[1992] 1 S.C.R. 49
Judgement Date	1992-01-15
Case Number	1109

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Sk. Ar. K. Ar. Somasundram Chettiar and Co. Madurai Vs. Commissioner of Income Tax. Madras

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