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TMI Blog1981 (6) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... on the prescribed forms supplied by M/s. Rallis India Ltd. The assessee could not delivery any of the agreed bales towards the performance of the contract. M/s. Rallis India Ltd. requested the assessee by their notices dt. 28th Jan., 1970 and 6th Feb., 1970 to supply the contracted bales of cotton. The assessee offered 200 bales of cotton on 6th March, 1970. However, as they were of inferior quality than the contracted quality, M/s. Rallis India Limited rejected the offer of the assessee to take the delivery of that. Later on M/s. Rallis India Ltd. vide its letter dt. 13th March, 1970 asked the appellant to settle the contract by way of making the payment at the rate of Rs. 150 per candy as damages for breach of contract. The assessee there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction by itself has no operative effect. Independently of its own it has little bearing on assessments. It is the provisions of s. 73 of the IT Act, 1961 which gives operative implications and bars the setting off of loss from speculative business against other business income. Sub-s. (1) of s. 73 reads as follows: "Any loss, computed in respect of speculative 'business' carried on by the assessee, shall not be set off except against profit and gains if any, of another speculation business." The above words speculation business occurring in s. 73(1) obviously did not mean any solitary transaction of a speculative nature. It would thus follow that a transaction may be speculative and still may not of its own come within the ambit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was or was not a speculative one covered by s. 43(5). In conclusion, we accept the appeal and direct the ITO to recompute the income of the assessee by allowing the loss of Rs. 13,500 to be set off against the business income of the assessee for the asst. yr. 1971-72. 4. On a reference by the Department their Lordships answered the question referred to them in the negative in favour of the Department and against the assessee. However, with the observation that the Tribunal will still have to decide the question whether the transaction was really a speculative transaction. 5. After receipt of the order of their Lordships of the MP High Court in MCC No. 250/75, we fixed the case for hearing on merits. 6. We have heard the ld. author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be deemed to be a speculative transaction". Thus, since in the case before us there was no element of any intention on the part of the assessee 'to guard against loss through future price fluctuations', it can be said to be only a simple case of breach of contract and the assessee will be entitled to claim the loss as business loss, more so when we have seen that the loss was determined after the assessee has failed to supply the good on or before the date of delivery. In this view, we are supported by the decision of their Lordships of the Calcutta High Court (1981) 22 CTR (Cal) 6 : (1981) 129 ITR 169 (Cal) wherein they have considered the case of a firm, which carried on the business of import and export of jute. In the course of its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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