Section 73 of Income Tax Act "Losses in speculation business"
73. (1) Any loss, computed in respect of a speculation
business carried on by the assessee, shall not be set off
except against profits and gains, if any, of another
speculation business.
(2) Where for any assessment year any loss computed in
respect of a speculation business has not been wholly set
off under sub-section (1), so much of the loss as is not so
set off or the whole loss where the assessee had no income
from any other speculation business, shall, subject to the
other provisions of this Chapter, be carried forward to the
following assessment year, and-
(i) it shall be set off against the profits and
gains, if any, of any speculation business carried on by him
assessable for that assessment year; and
(ii) if the loss cannot be wholly so set off, the amount of
loss not so set off shall be carried forward to the
following assessment year and so on.
(3) In respect of allowance on account of depreciation or
capital expenditure on scientific research, the provisions
of sub-section (2) of section 72 shall apply in relation to
speculation business as they apply in relation to any other
business.
(4) No loss shall be carried forward under this section for
more than four assessment years immediately succeeding the
assessment year for which the loss was first computed.
Explanation.-Where any part of the business of a company
(other than a company whose gross total income consists
mainly of income which is chargeable under the heads
"Interest on securities", "Income from house property",
"Capital gains" and "Income from other sources", or a
company the principal business of which is the business of
trading in shares or banking or the granting of loans and
advances) consists in the purchase and sale of shares of
other companies, such company shall, for the purposes of
this section, be deemed to be carrying on a speculation
business to the extent to which the business consists of the
purchase and sale of such shares.