CA Final · Direct Tax Laws & International Taxation · Aggregation of Income, Set Off or Carry Forward of Losses
Kiran Investments Ltd is a company whose business includes purchase and sale of shares of other companies. Its gross total income consists mainly of income under 'Income from house property' and 'Capital gains'. It incurred a loss of Rs 4,00,000 on share trading without delivery of shares in the year. Under section 113 of the Income-tax Act, 2025, what is the position regarding deemed speculation business?
The deeming provision does not apply. A company is deemed to carry on speculation business for share trading, but this is excluded where its gross total income consists mainly of income from house property, capital gains or other sources, as in this case.
- AThe share trading is deemed speculation business, so the loss is carried forward for four years
- BThe deemed speculation rule does not apply, because gross total income consists mainly of house property and capital gains incomeCorrect
- CThe deemed rule applies only if principal business is banking, which is absent
- DThe loss is deemed speculation but can be set off against house property income
Explanation
Section 113(5) deems share trading of a company a speculation business, but sub-section (6)(a) excludes a company whose gross total income consists mainly of house property, capital gains or other sources income. So the deeming does not apply. Option A ignores the exclusion.
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