Commission from forward-contract brokerage was held outside speculation business income, as it arose from a separate non-speculative activity.

Commission earned for arranging forward contracts for clients was held not to form part of speculation business income because it arose from brokerage services performed independently of market fluctuations and without any speculative risk to the assessee. The assessee carried on two separate activities: speculative transactions on its own account and brokerage work for clients. Since the commission was linked to the brokerage activity, and not to the profits or losses of speculative dealings, it could not be assessed under the head of speculation business. The referred question was answered in the negative, in favour of the Revenue.

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Issues: Whether commission received by the assessee for arranging forward contracts on behalf of clients could be assessed as profits of speculation business instead of regular business income.

Analysis: The commission was earned independently of market fluctuations and without any speculative risk to the assessee. The assessee carried on two distinct activities: speculative transactions on its own account and brokerage work for clients. The commission arose from the brokerage activity and was not part of the profits or losses of speculative transactions, even though it was connected with transactions in forward contracts.

Conclusion: The commission receipts could not be assessed under the head of speculation business and the answer to the referred question was in the negative, in favour of the Revenue.

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