9911796707
TMI Blog1968 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ding accounting year was the year ended on the 31st May, 1958. The assessee is Messrs. Budge Budge Investment Co. Ltd., which, inter alia, deals in jute and hessian. In the course of its dealings in jute and hessian during the relevant accounting year the assessee sustained a loss of Rs. 75,609. The Income-tax Officer refused to treat this loss as a business loss. He found that in no case delivery of the goods was given or taken. He, therefore, treated the loss as a speculative loss. Before the Appellate Assistant Commissioner it was contended on behalf of the assessee that contracts for each transaction of purchase and sale were in the form prescribed by the Indian jute Mills Association and these contracts were settled in each case by g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions which are in the nature of a business shall not be taken into account except to the extent of the amount of profits and gains, if any, in any other business consisting of speculative transactions ... Explanation 1.-Where the speculative transactions carried on are of such a nature as to constitute a business, the business shall be deemed to be distinct and separate from any other business. Explanation 2.-A speculative transaction means a transaction in which a contract for purchase and sale of any commodity including stocks and shares is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. . . " The section clearly stipulates that, in order to be a speculative transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court, the word " actual " in Explanation 2 to section 24(1) means " real " as opposed to " theoretical or probable. " This court held further that there was nothing in Explanation to section 24(1) to show that it was intended to apply only to transactions in which there was no actual delivery of goods even at the ultimate stage in a series of chain transactions. The judgment was delivered by G. K. Mitter J. sitting with Masud J. Mr. Debi Pal says that in Wadhana's case the contracts for purchase and sale were between the same parties deliverable on the same day ; but, in the instant case, the contracts were between the assessee, on the one hand, and different parties, on the other. Secondly, says Mr. Pal, Wadhwana's case proceeded o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pucca delivery orders. In other words, the contracts were for purchase and sale of jute or hessian and, instead of actual delivery, that is to say, real or physical delivery of goods, the contracts were concluded by delivery of pucca delivery orders. These transactions, on the findings of the tax authorities, are clearly transactions which were settled otherwise than by actual delivery and, as such, they were speculative transactions. We cannot overlook that the words used in the section are " actual delivery ". Now, delivery, it is well known, may be actual or constructive. Delivery is constructive when it is effected without any change in the actual possession of the thing delivered, as in the case of delivery by attornment or symbolic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other, by the appellants to third parties as buyers from the appellants. These two deliveries might synchronise in point of time, but were separate, in point of fact and in the eye of law. " The Supreme Court reaffirmed this view in State of Andhra Pradesh v. Kolla Sree Ramamurthy . These two judgments of their Lordships of the Supreme Court indicate that " actual delivery ", in cases covered by the passing of delivery orders, takes place when the goods are delivered to the ultimate endorsee. It seems to us, in these premises, that a delivery of a pucca delivery order cannot be " actual delivery " within the meaning of Explanation 2 to section 24(1). Learned counsel for the assessee, as we have seen, strongly relies on this courts ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another Bench decision of our court which should be referred to in this connection. In Murlidhar Jhunjhunwalla v. Commissioner of Income-tax , my learned brother (Banerjee J. concurring) has held that there must be actual delivery or transfer of the commodity itself in order to take a transaction out of the definition of speculative transaction in Explanation 2 to section 24(1). The word "settled has been held to mean" determined "or" concluded " or " disposed of. According to my Lord, a contract for sale and purchase of jute may be " concluded " and/ or "determined " by delivery of pucca delivery orders ; but it would be a case of a contract " concluded " and/or " determined " without actual delivery of the commodity and would be a specul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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