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CA Final · Direct Tax Laws & International Taxation · Aggregation of Income, Set Off or Carry Forward of Losses

Gupta Investments Ltd, a company, has a business of buying and selling shares of other companies, which forms part of its overall business. Its gross total income consists mainly of income from house property and capital gains. It also has a trading loss from its share dealings. Under the Income-tax Act, 2025, what is the position regarding the deemed speculation business of the company?

The deemed speculation provision does not apply to Gupta Investments Ltd. The law excludes a company whose gross total income consists mainly of house property, capital gains or other sources income. Hence its share dealings are not deemed speculation business on this basis.

  1. AThe company is deemed to carry on a speculation business to the extent of share trading
  2. BThe deemed speculation provision does not apply, because its gross total income consists mainly of house property and capital gains incomeCorrect
  3. CThe deemed speculation provision applies only if the company is a closely held company
  4. DThe deemed speculation provision applies to the whole business of the company

Explanation

The deeming of share purchase and sale by a company as speculation business does not apply where its gross total income consists mainly of income chargeable under house property, capital gains or other sources, or where its principal business is trading in shares, banking or granting loans. Gupta's income is mainly house property and capital gains, so the exclusion applies. The first option ignores this exception.

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