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Issues: Whether brought forward speculation losses were required to be adjusted first against speculation profits before setting off other current losses and incomes, and whether the CBDT circular supporting that method remained binding under the Income-tax Act, 1961.
Analysis: The revenue's appeal turned on the treatment of carried forward speculation losses and the effect of the CBDT circular issued under the 1922 Act. The Court held that beneficial circulars issued by the CBDT relaxing the rigour of the Act are binding on the income-tax authorities. Since the circular had not been withdrawn, and there was no contention that the relevant provisions of the old and new Acts were materially different for this purpose, the circular continued to govern the set-off of brought forward speculation losses. The approach adopted by the Tribunal, following the Commissioner (Appeals), was therefore in accordance with the settled legal position.
Conclusion: The preferred method of setting off brought forward speculation losses first against speculation profits was upheld, and the revenue's challenge failed.
Final Conclusion: The appeal was found to be without merit and the Tribunal's order was sustained, leaving the assessee entitled to the benefit of the more advantageous set-off method.
Ratio Decidendi: A beneficial CBDT circular that has not been withdrawn remains binding on the income-tax authorities, and may govern the set-off of carried forward losses even if issued under the earlier Act, so long as the later statutory regime is not materially different for that purpose.
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