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TMI Blog1978 (4) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... ot given in respect of these transactions, the Income-tax Officer held that the price differences as paid amounted to speculation loss. In that view, he disallowed the speculation loss of Rs. 46,143. Against the said disallowance, the assessee went up in appeal to the AAC. It was argued before that authority that the loss in question disallowed by the Income-tax Officer did not arise from speculative transaction and that even if it arose from speculative transaction it was not from speculative business and as such it had to be set off against other income. The justification for this argument was found in the earlier decisions of the Appellate Tribunal. The AAC held that the loss of Rs. 46,143 suffered by the assessee-firm on account of paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amaiah and Co s (1) case. It is not necessary to refer to all these cases since Mr. Swamy has frankly conceded that if the commodity which was the subject-matter of contract was settled otherwise than by actual delivery there was inevitably a speculative transaction within the meaning of s. 43(5) of the Income-tax Act, 1961. The pertinent question was whether there was a speculative business. A similar question came up before the Tribunal on numerous occasions. In ITA Nos. 1586 to 1591 (Hyd.) 1976-77 for the assessment years 1969-70 to 1974-75, the Tribunal observed as follows: "We may again make it clear that so far as settlement of contracts after the breach occurred, s. 43(5) would have no application as laid down by the Tribunal in va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this suggestion as a general rule. It is already provided that if on the facts of any case it can be demonstrated that the forward transaction has been entered into only for safeguarding against loss through future price fluctuations, such a transaction should not be treated as a speculative transaction but as a case of hedging. However, the case of a bona fide ready delivery contract being settled by delivery to a substantial extent and by payment of differences for the balance is exceptional and, in such a case the difference paid need not be treated as a loss arising in a speculative transaction." The Board s circular thus fully covers the impugned transactions for the relevant assessment years. We take no exception to the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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