9911796707
TMI Blog1968 (8) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... September 2, 1964, in I.T.R. No. 69 of 1963. The assessee is a member of an association for speculation in cocoanut oil. The assessee also speculates on its own. It also receives orders from its constituents who are not members of the association to speculate on their behalf. The procedure is as follows : The assessee receives a phone instruction or telegram to buy or sell a certain quantity. Immediately it enters it into its books and informs that party of the sale or purchase having been effected. But as only members can deal with the association, actually no such purchase or sale is made through the association in the name of that particular person, though no doubt there are other purchases or sales in forward transactions by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to Rs. 41,197 (for 1958-59), Rs. 39,730 (for 1959-60), and Rs. 22,652 (for 1960-61), should be assessed under the head ' speculation business ' and not under regular business in the company's assessments for the years ended March 31, 1959, March 31, 1960, and March 31, 1961 ? " By its judgment dated September 2, 1964, the High Court answered the question in the affirmative and in favour of the assessee. Section 24(1) of the Income-tax Act, 1922, hereinafter called " the Act provides as follows : " 24. (1) Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member ; shall not be deemed to be a speculative transaction." It was contended on behalf of the appellant that the view taken by the High Court is erroneous in law and the receipt of commission was a receipt from the business of the assessee as a broker and was not a receipt of income from the business of speculation and therefore the commission should not be assessed under the head " speculation business ". In our opinion, the argument put forward on behalf of the appellant is well-founded and must be accepted as correct. The reason is that there is no element of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these speculative transactions on behalf of his clients and not on his own behalf. There is thus no element of speculation in the commission income received by the assessee and the commission is earned and received by him independently of the profit or loss sustained by his clients in the transaction. We are accordingly of the opinion that the assessee is not entitled to get the commission receipts assessed under the head " speculation business " for the assessment years 1958-59, 1959-60 and 1960-61 and the question referred to the High Court should be answered in the negative and in favour of the Commissioner of Income-tax. For these reasons the judgment of the High Court of Kerala dated September 2, 1964, in I.T.R. No. 69 of 1963 is s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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