COMMISSIONER OF INCOME TAX, GUJARAT vs M/S. S. C. KOTHARI

The Supreme Court held that contracts prohibited by statute, such as those under Section 15(4) of the Forward Contracts (Regulation) Act, 1952, are illegal and unenforceable. The Court ruled that losses incurred from such illegal contracts cannot be set off against other business income under Section 10(1) of the Income-tax Act, 1922, nor under Section 24(1) as they do not constitute enforceable speculative transactions. The High Court's decision allowing set off under both sections was overturned, affirming the illegality of the contracts and the non-allowability of the losses.