PATHAK J. - This is a reference under section 66(I) of the Indian Income-tax Act referring the following two questions for decision :
'(1) Whether the first proviso to sub-section (I) of section 14 of the Income-tax Act was intra vires of Parliament ?
(2) Whether, on a true interpretation of the first proviso to section 24(I), the assessee was entitled to a deduction of the speculation loss of Rs. 1,964 in the computation of the business income under section 10 ?'
The assessee is a registered firm carrying on business in ready bardana and sutli and also engaging in speculative transactions. During the assessment proceedings it claimed to adjust the losses in speculative transactions sustained by it against the profits from its other business for the purpose of determining the profits and gains under section 10. This claim was negatived by the Income-tax Officer, and an appeal before the Appellate Assistant Commissioner and, subsequently, a second appeal before the Income-tax Appellate Tribunal were both dismissed.
We have held in I.T.R. No. 130 of 1960 that an assessee is entitled to a deduction of the loss in speculative transactions while computing the profits and gains under the head 'profits and gains from business' under section 10. For the reasons contained in our judgment in that case we answer the second question in the affirmative.
In view of our answer to the second question, learned counsel for the assessee states that it is not necessary for us to answer the first question. Accordingly, we return no answer upon the first question.
We direct that a copy of this judgment, under the seal of the court and the signature of the Registrar, shall be sent to the Income-tax Appellate Tribunal. The parties shall bear their own costs. Counsels fee is assessed at Rs. 200.