following grounds have been raised by assessee in this appeal, which reads as under:"1. CIT(A) erred in treating loss of Rs. 53,22,770 as speculation loss as per Explanation to section 73. 2. CIT(A) erred in upholding attribution of amount of Rs. 33,34,903 as proportionate disallowance of expenditure in respect of Share trading activities and therefore, increasing speculation loss." 2. Briefly stated facts are these: business of assessee is that of stock broker as well as dealing in shares. Profit & Loss A/c. showed loss of Rs. 53,22,770 under head "Trading in Securities". In course of assessment proceedings, assessee was asked to show cause as to how such loss should not be considered as speculative loss in terms of provisions of Explanation to section 73 of Income-tax Act, 1961 ('Act'). In response to same, first contention of assessee was that nature of transactions in shares was not speculative in terms of section 43(5) of Act which defines speculative transaction inasmuch as all transactions were supported by delivery. Secondly, it was contended that major loss was on account of diminution in value of stock which could not be considered as speculative loss. Assessing Officer rejected first contention by holding that case of assessee falls within ambit of Explanation to section 73 which, by deeming fiction, considers dealing in shares as speculative business unless case of assessee falls within exceptions provided therein. It was further held that none of exceptions applied to case of assessee. second contention of assessee was rejected in view of decision of Tribunal in case of Prudential Construction Co. Ltd. v. Asstt. CIT [2000] 75 ITD 338 (Hyd.). Consequently, entire loss of Rs. 53,22,770 was assessed as speculative loss which could not be set-off against other business income of assessee. Assessing Officer was also of view that expenditure incurred by assessee should be proportionately allocated to speculative business also in view of decision of Hon'ble Calcutta High Court in case of Eastern Aviation and Industries Ltd. v. CIT [1994] 208 ITR 1023 as well as decision of Hon'ble Bombay High Court in case of Sinh National Sugar Mills (P.) Ltd. v. CIT [1980] 121 ITR 742. Consequently, he worked out sum of Rs. 33,34,903 being expenditure attributable to speculative business by applying pro rata basis. This amount was also treated as part of speculative loss. Consequently, total speculative loss was determined at Rs. 86,57,673 which was not allowed to be set-off against other income of assessee. On appeal, Learned CIT(A) confirmed findings of Assessing Officer for reasons given by Assessing Officer. Aggrieved by same, assessee is in appeal before Tribunal. 3. Learned Counsel for assessee has vehemently assailed order of Learned CIT(A) by raising various contentions. first contention raised by him that case of assessee falls within ambit of first exception provided in Explanation to section 73 of Act inasmuch as gross total income of assessee mainly consist of income chargeable under head "Income from other sources". He drew our attention to computation of income filed by assessee along with return to point out that assessee had declared interest income of Rs. 3,25,920 under head "Income from other sources" while business loss was declared at Rs. 74,67,685. It was clarified by him that Assessing Officer, by mistake, has not assessed interest income under head "Income from other sources". He drew our attention to language employed by Legislature in Explanation to section 73 of Act to point out that in order to attract first exception, what is important is, income which is chargeable and not income which is computed under heads, "Income on securities", "Income from business", "Capital gains", and "Income from other sources". According to him, income chargeable to tax can be only positive income and, therefore, loss computed under any of heads, cannot be considered as income chargeable to tax. He drew our attention to provisions of section 4, section 32(2) and section 192 of Act where expression "income chargeable to tax" has been employed by Legislature and according to these provisions, it is positive income which is charged to tax. It was emphasised by him that unless there is positive income, question of charging same to tax simply does not arise. Therefore, loss computed under any head of income would not fall within ambit of expression "income chargeable" and consequently same will have to be ignored while working out applicability of first exception. 4. To substantiate his argument, he drew our attention to return Form N o . 1 which is required to be used for declaring income in case of company. He invited our attention to Sr. No. 18 which refers to gross total income as per Schedule F-2. Schedule F refers to incomes computed under various heads i.e., "a - Income from house property, b - Income from business or profession, c - Capital gains, and d - Income from other sources" and then gross total income is mentioned which is total of Items "a" to "d". He then refers to various schedules under which income chargeable under various heads has to be computed. Schedules "A" to "D" prescribe mode of computation under various heads and at end of each Schedule, income chargeable under various heads is finally computed. He then refers to Schedules E-1, E-2 and E-3, where income chargeable to tax under various heads is taken for purpose of setting-off of losses, if any, under section 71 of Act. Thereafter, final figure is taken to Schedule F, which is positive income and sum total of incomes chargeable under various heads is treated as gross total income. 5. In view of above scheme of Act, it was pleaded that income chargeable to tax would not include negative income. Consequently, business loss declared or computed under head "Income from business or profession" cannot be considered as income chargeable to tax and, therefore, same has to be ignored for purpose of determining gross total income referred to in first exception in Explanation to section 73 of Act. 6. second contention of Learned Counsel for assessee is, that positive income, howsoever small, would always be more than negative income howsoever large. According to him, earning of Rs. 100 is always better situation than incurring loss of Rs. 1 lakh. Similarly, no prudent person would buy sick unit in comparison to small unit with lesser profits. Therefore, it was pleaded that even assuming that business loss computed under head 'Income from business or profession', is to be treated as income chargeable to tax then, interest income assessed as 'Income from other sources', would be more than business loss. He tried to distinguish decision of Hon'ble Calcutta High Court in case of Eastern Aviation and Industries Ltd. (supra) relied upon by lower authorities on ground that their Lordships of Hon'ble Calcutta High Court proceeded on footing that words 'income' or 'profits' represents not only positive income but also losses, which is not requirement to attract exception. What is required to be considered is, income chargeable to tax which always mean positive profits. It was also submitted by him that decision of Hon'ble Calcutta High Court is not binding precedent on this Bench of Tribunal sitting at Mumbai in view of judgment of Hon'ble Bombay High Court in case of CIT v. Thane Electricity Supply Ltd. [1994] 206 ITR 727, wherein it has been held that decision of non-jurisdictional High Court has only persuasive value and is not binding. Therefore, decision of Hon'ble Calcutta High Court cannot be applied to present case inasmuch as Hon'ble Calcutta High Court did not consider expression "income chargeable" used by Legislature for attracting first proviso in Explanation to section 73 of Act. He also distinguished decision of Tribunal, Mumbai Benches, in case of Yucca Finvest (P.) Ltd. v. Dy. CIT [2006] 101 ITD 403, by giving similar reasoning inasmuch Tribunal followed decision of Hon'ble Calcutta High Court. On other hand, he relied on decision of Tribunal, Mumbai Benches, in case of Associated Capital Market Management (P.) Ltd. [IT Appeal No. 1103 (Mum.) of 2001], copy of which is placed before us. He drew our attention to para 6 of order to point out that facts of present case and facts in that case for assessment year 1996-97, are almost similar. He then referred to para 9 to point out that revenue had relied on decisions of Hon'ble Calcutta High Court in case of Eastern Aviation & Industries Ltd. (supra) and in case of Aryasthan Corpn. Ltd. v. CIT [2002] 253 ITR 401. Then reference was made to para 12 to point out that emphasis of assessee's counsel was on chargeability of income under different heads. Further, reference was made to decision of Hon'ble Supreme Court in case of CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297, wherein it has been held that judgment of Court has to be read and interpreted in context in which it was decided. Finally, he referred to para 14, wherein it has been held that "if gross total income is loss and such gross total income includes some positive income from other sources, etc., it will have to be presumed that main sources of income is income from other sources and consequently, Explanation to section 73 shall not come into play". 7. next contention of Learned Counsel for assessee was that l o s s arising on account of valuation of shares cannot be considered speculative loss since it does not involve purchase or sale of shares which is condition for incurring loss. next contention of Learned Counsel for assessee was that allocation of expenses towards speculative business has not been properly made. And lastly, it was contended that even if there are two possible views favourable to assessee should be adopted. 8. On other hand, Learned D.R. has relied on order of lower authorities and case law referred to by them. According to him, decision of Hon'ble Calcutta High Court squarely covers issue. He also relied on decision of Tribunal, Mumbai Bench, in case of Yucca Finvest (P.) Ltd. (supra). Regarding contentions of assessee's counsel that loss on account of valuation of closing stock, cannot be considered as speculative loss. He referred to decision of Tribunal in case of Paharpur Cooling Towers Ltd. v. Dy. CIT [2003] 85 ITD 745 (Kol.) and in case of Prudential Construction Co. Ltd. (supra), wherein it has been held that if assessee is carrying on business of purchase and sale of shares, then entire business shall be treated as speculative business and consequently, loss even arising on account of valuation of closing stock would be considered as speculative loss in terms of Explanation to section 73 of Act. 9. Rival submissions have been considered carefully. question for our consideration is, whether case of assessee falls within scope of first exception provided in Explanation to section 73 of Act. It would be appropriate to refer to provisions of Explanation to section 73 as under:"Explanation.-Where any part of business of company (other than company whose gross total income consists mainly of income which is chargeable under heads "Interest on securities", "Income from house property", "Capital gains" and "Income from other sources", or company principal business of which is business of banking or granting of loans and advances) consists in purchase and sale of shares of other companies, such company shall, for purposes of this section, be deemed to be carrying on speculation business to extent to which business consists of purchase and sale of such shares." Perusal of above Explanation shows that where any part of business of company consists in purchase and sale of shares of other companies, then such company shall be deemed to be carrying on speculative business, to extent of which business consists of purchase and sale of shares, for purpose of section 73. However, two exceptions have been provided to such deeming provisions. first exception is case where gross total income of such company consists mainly of income which is chargeable under heads 'Interest on Securities', 'Income from house property', 'Capital gains', and 'Income from other sources'. We are not concerned with second exception since case of assessee is that its case falls within scope of first exception. Therefore, it is necessary for us to adjudicate about scope of gross total income. 10. At this stage, it would be appropriate to refer to decision of Special Bench in case of Asstt. CIT v. Concord Commercials (P.) Ltd. [2005] 95 ITD 117 (Mum.), wherein it has been held in Para 50 that meaning of expression 'gross total income' used in Explanation to section 73 has to be understood as given in section 80B(5) of Act. According to section 80B(5), Gross Total Income means total income computed in accordance with provisions of this Act, before making any deduction under Chapter VI-A of Act. That means that first incomes chargeable under various heads in Chapter IV are to be computed and then loss, if any, has to be set off in accordance with provisions contained in Chapter VI of Act. Then balance income chargeable to tax under various heads to be aggregated to determine Gross Total Income. 11. However, it is pertinent to note that definition of "gross total income" in section 80B(5) is only for purpose of Chapter VI-A and, therefore, one may argue that this definition may not be applicable while deciding scope of "gross total income" under provisions not falling in Chapter VI-A. Therefore, we have examined scheme of Act and find that such argument would be contrary to scheme of Act. We have gone through contents of Form No. 1 which is utilised for declaring income in case of company. Sr. No. 18 under head "Computation of income" refers to "Gross total income" computed as per Schedule F-2. If we refer to Schedule F-2, "gross total income" is shown equal to 1A to 1D of Schedule-F. 1A refers to "Income from house property" (Schedule A-17 or as case may be E.2.1.v.); 1B refers to "Income from business or profession" (Schedule B-34 or as case may be E.2.2.v.); 1C refers to 'Capital Gain - (i) Short-term' (Schedule C-17A or as case may be E.2.3.v.) (ii) long-term (C-17B or as case may be E.2.4.v.); 1D refers to 'Income from other sources' (Schedule D-9 or as case may be E.2.5.v.). Schedules E-1 to E-3 provide setting off of any loss under any head against income under any other head and then computes net income chargeable to tax under various heads. If any loss remains to be set off, then E-3 provides for carry forward of unabsorbed losses to next years. As per Schedule E-2, it is only positive income which forms part of gross total income as per Schedule F-2. Therefore, gross total income as per Schedule F-2 is same as provided in section 80B(5) of Act. 12. Now let us examine scope of expression 'Gross total income'. After going through scheme of Act, we find that gross total income consists of only positive income and losses arising from any source does not enter into computation of gross total income. As noted earlier income of assessee has to be computed under various heads specified under section 14 of Act. Computation of income under such heads may result into positive profits or losses as case may be. Section 70 provides that losses from one source of income would be set off against income from another source under same head. If still there is loss under any of heads, then it can be set off under section 71 against income computed under other heads subject to limitation provided therein. loss under head 'Profits and gains from business or profession', if cannot be set off against incomes computed under other heads then, it has to be carried forward to succeeding years as per provisions of section 72 of Act. Similarly, loss computed under head 'Income from house property' has to be carried forward to succeeding years under section 71B of Act if such loss could not be set off under section 71. Section 73 provides that speculative business loss can be set off only against profits from speculative business and if such loss cannot be set off then it is to be carried forward to next years for set off in accordance with provisions of section 73. Similarly, capital loss, if not set off, has to be carried forward to next years as per provisions of section 74. losses computed under head 'Income from other sources' can be set off under section 71 against income under other heads but, subject to provisions of section 74A, it cannot be allowed to be carried forward to next years. It is only loss incurred to assessee being owner of horses maintained for running in horse races which is allowed to be carried forward to next year as per section 74A. scheme of Act, therefore, reveals that losses computed under either of heads either are to be set off against current income under other heads or are to be carried forward to next year for set off. Whenever, whole or part of loss is set off against income computed under other heads, to that extent income under other head is reduced or wiped of and it is only balance income which forms part of gross total income. Therefore, it is clear from scheme of Act that it is only positive income which forms part of Gross Total Income and Losses under any head does not enter in computation of gross total income. Such gross total income, therefore, shall be considered to adjudicate issue whether first exception provided in Explanation to section 73 applies or not. Let us now explain with help of two Examples. Example I: For instance, assessee-company incurs loss of Rs. 5 lakhs in purchase and sale of shares and earns positive income of Rs. 3 lakhs from other business activities, income of Rs. 1.50 lakhs by way of rent from house property and income of Rs. 1 lakh by way of interest. As per decision of Special Bench in case of Concord Commercials (P.) Ltd. (supra), loss under head "Profits and gains from business" would be computed at Rs. 2 lakhs. This loss will have to be set-off against rental income chargeable under head "Income from house property" and interest income chargeable to tax under head "Income from other sources". Thus, income by way of rent from house property would be wiped out and income under head "Income from other sources", would be reduced to Rs. 50,000. As consequence thereof, there would be neither loss nor profit under head "Income from business". Thus, would be neither loss nor profit under head "Income from business". Thus, gross total income would come to Rs. 50,000 which is chargeable to tax under head "Income from other sources" and consequently, first exception would apply since gross total income mainly consists of income under head "Income from other sources". This view is in conformity with view of Special Bench in case of Concord Commercials (P.) Ltd. (supra). Example II: For instance, assessee incurs loss of Rs. 5 lakhs in purchase and sale of Shares, earns profit of Rs. 3 lakhs in other business activity, income of Rs. 1,00,000 by way of rent from house property and interest income of Rs. 70,000. In this case, business loss would be Rs. 2 lakhs which would be set off against income of Rs. 1,70,000 being under heads "Income from other sources" and "Income from house property". In this process, entire income under heads "Income from other sources" and "Income from house property" would be wiped out and net result would be "Nil" income under heads "Income from other sources" and "Income from house property". This would leave unabsorbed business loss of Rs. 30,000 which would be carried forward to next year. Thus, in this case, gross total income would be "Nil" and, therefore, first exception would become inapplicable. Consequently, provisions of Explanation to section 73 would be attracted and as result thereof, loss in sale of shares amounting to Rs. 5 lakhs would be treated as speculative loss, by virtue of deeming provisions of Explanation to section 73 of Act. 13. It has been contended by Learned Counsel for assessee that income chargeable to tax refers to positive income only and, therefore, loss computed under head "Income from business", is to be ignored. We are in agreement with contention of Learned Counsel for assessee that income chargeable to tax has to be positive income but later part of his contention does not survive in view of our finding that loss computed under any head is either set-off against income computed under other heads or is to be carried forward if such loss remains to be set-off and consequently, does not enter in computation of "gross total income". 14. In present case, income from other sources is only Rs. 3,25,920 and business loss of Rs. 74,67,685 as per computation of income filed by assessee. Thus, entire income under head "Income from other sources", would become "Nil" after being set-off against business loss. unabsorbed business loss is also to be carried forward to next years. Thus, there would be no income under any of heads. Thus, gross total income would be "Nil" and consequently, first exception would not apply. As result thereof, deeming provisions of Explanation to section 73 of Act would be attracted and consequently, loss arising from trading in shares would be deemed to be loss arising from speculative business, which cannot be set-off against other business income. However, assessee would be entitled to carry forward same in subsequent year as per law. 15. contention of assessee's Counsel that loss on account of valuation o f closing stock of shares should not be considered as speculative loss is covered against assessee by two decisions of Tribunal namely, Prudential Construction Co Ltd.'s case (supra) and Paharpur Cooling Towers Ltd.'s case (supra) and therefore, is rejected. 16. In view of our legal findings given in preceding paras, issue whether 'income' would include 'loss' loses its significance vis-a-vis Explanation to section 73 of Act. 17. only question which remains for our consideration relates to allocation business expenses towards speculative loss. Learned counsel for assessee has drawn our attention to details of expenditure appearing at Page-8 of Paper Book to point out that figure of total expenditure of Rs. 3,55,04,588 includes loss from trading in securities amounting to Rs. 53,22,770. If this loss is to be treated as speculative loss, then this figure has to be excluded from total expenditure. We find merit in this argument of Learned Counsel for assessee since such loss in shares cannot be treated as part of total expenditure. Assessing Officer is, therefore, directed to exclude same for purpose of allocation. 18. second contention of Learned Counsel for assessee is that, interest expenditure amounting to Rs. 84,37,224 cannot be taken into consideration since assessee has not borrowed any funds for purchase of shares. This fact requires verification and, therefore, Assessing Officer is directed to verify this aspect. If he finds that borrowed funds had not been utilised by assessee for investment in shares, then he shall exclude same from total expenses before allocating expenses. 19. In result, assessee's appeal stands partly allowed. *** I.I.T. INVESTRUST LTD. v. INCOME TAX OFFICER