Tax Audit Report Clause 32 (c) - Speculation Loss & its reporting | TAR FY 22-23 AY 23-24

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Clause 32(c) deals with the assessment of speculation losses incurred by the assessee during the previous year, focusing on the provisions of Section 73 of the Income Tax Act. Here's an explanation of this clause:
Section 73 and Speculation Loss:
Section 73 of the Income Tax Act pertains to the treatment of speculation losses. It outlines how these losses can be set off against profits or gains of another speculation business and imposes restrictions on carrying forward such losses.
Setting Off of Speculation Losses:
Section 73(1): According to this subsection, any loss incurred in relation to a speculation business cannot be set off against any other income except the profits and gains of another speculation business. In other words, speculation losses can only be set off against speculation gains.
Carry Forward Limitation:
Section 73(4): This subsection limits the carry forward of speculation losses. It states that speculation losses can only be carried forward for a maximum of four assessment years immediately following the assessment year for which the loss was initially computed.
Definition of Speculative Transaction:
Section 43(5): This section defines speculative transactions. Speculative transactions are those involving the purchase or sale of any commodity (including stocks and shares) or any other property that is settled otherwise than by the actual delivery or transfer of the commodity or property. However, it's important to note that derivative transactions (such as futures and options) and commodity derivatives are excluded from the definition of speculative transactions.
Reporting Deemed Speculation Loss:
Explanation to Section 73A: Deemed speculation business refers to certain transactions that are treated as speculation business, even if they might not fall under the definition of speculative transactions. Losses from such deemed speculation business are reported under Section No. 32(e) of the tax audit report.
In summary, Clause 32(c) inquires whether the assessee has incurred any speculation losses during the previous year. It requires the tax auditor to determine whether such losses exist and to report them accurately in the tax audit report. Speculation losses are subject to specific rules and restrictions, including the limitation on carry forward and set off against profits or gains of another speculation business. This clause ensures that the assessment of speculation losses is in line with the provisions of Section 73 of the Income Tax Act.