Speculative business loss cannot be set off against non-speculative profits in computing business income under section 10.

A speculative business loss was held not to be an admissible deduction for set-off against profits from non-speculative businesses in computing business income under section 10 of the Income-tax Act. The Supreme Court noted that the High Court had followed an earlier view permitting such set-off, but that view had already been overruled, and no sufficient ground existed to reopen the settled position. The question was therefore answered in the negative, and the department's position prevailed for the relevant assessment year.

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Issues: Whether the loss incurred in speculative business could be set off against profits from non-speculative businesses in the same accounting year, and whether such loss was an admissible deduction in computing business income under section 10 of the Income-tax Act.

Analysis: The relevant assessment year was 1953-54. The High Court had followed an earlier view that permitted the set-off, but that view had already been overruled by the Supreme Court in an earlier decision. No sufficient ground was made out to reopen that settled position. On that basis, the claimed set-off could not be accepted as an admissible deduction in the determination of business income.

Conclusion: The question was answered in the negative and in favour of the department. The speculative loss was not allowable to be set off against the assessee's non-speculative business profits under section 10.

Ratio Decidendi: A speculative business loss is not an admissible deduction for set-off against profits of non-speculative businesses in computing business income under section 10 of the Income-tax Act.

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