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Speculative Loss
Speculative Loss
To understand the speculative business we need to understand the speculative transaction which
basically means a transaction in which a contract of purchase and sell of any commodity including
stocks is periodically and ultimately settled by other means than the actual delivery of the shares or
transfer of the commodity.
Here the line of importance is is periodically and ultimately settled by other means than the actual
delivery of the shares or transfer of the commodity which implies that there is no physical delivery of
the shares or the transfer of the commodity. It must be also noted that the business of the assessee
must be deemed as distinct and separate from any other business, where such assesse carries on
speculative business.
For example: In intra day trading we buy the shares and sell them on the same day. There is no
actual delivery of the stock.
Section 73
The losses of the speculative business can be set off against the proceeds from the other
speculative business.
The loss which is not set off in case the profit in the same year is not enough to set off the
loss, then the loss will be carry forwarded and will be set off against the speculative profit of
the next assessment year. The loss incurred can be carry forwarded for the four-assessment
year only.
The common point to match the loss in this section is not the business in which the loss was
incurred but it is the asses who wants to set off the loss. The set off loss is only possible
when the asesse is same.
NOTE
Though the loss of speculative business can only be setoff with the profit of the speculation business,
but the case is not same for the gain from speculation business can be netted off against the losses
from non-speculative business.
Return of Loss should be Submitted in Time (Section 80) for Carry Forward and Set Off of Speculation
Loss
The following losses cannot be carried forward unless the return of income (for the year in which the
loss is incurred) is submitted within the due date [of submission of return as given in section 139(1)].
The delay in submission of return of loss may be condoned if a few conditions are satisfied. CBDT has
power under section 119(2) to condone delay in case of a return which is filed late and where a
claim for carry forward of losses is made.