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TMI Blog1973 (3) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... . for the purchase of 180 bales of 40's yarn at Rs. 28.75 per bundle. A few days later and in one or two cases on the same day, after the contracts had been entered into, the assessee also entered into contracts for the purchase of 120 bales of 80's at Rs. 76.75. During the previous year the Indian Cotton Mills Federation, Bombay, had fixed a sort of an unofficial ceiling of price of cotton yarn up to 40's. The purchase price of Rs. 28.75 fixed under the contract above referred to was in accordance with the schedule of rates fixed by the Indian Cotton Federation. The nature of the transaction could be better described with reference to one lot as an illustrative case. On April 4, 1962, the assessee-firm entered into a contract for the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee to Shri Ramalinga Choodambikai Mills on March 25, 1962. On March 29, 1962, the assessee entered into a contract for the purchase of 25 bales of 40's at Rs. 28.25 per bundle. It is stated that the assessee had taken delivery of 25 bales of 40's. The assessee claimed the total sum of Rs. 16,000 (Rs. 11,500 +Rs. 4,500) as a business loss. The Income-tax Officer treated the payment of Rs. 16,000 as loss in speculation on the ground that the assessee-firm had not taken delivery of the yarn covered by these contracts. He also pointed out that the assessee was a speculator as was clear from the assessment of the prior years. Accordingly, he disallowed the claim and held the loss as a speculation loss that could be carried over and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultimately settled and no actual delivery of the goods was effected under the settlement then it is a speculative transaction. The requirement under section 30 of the Contract Act of the existence of the intention of the parties even at the time of original contract not to give or take delivery of the goods to make it a speculative or wagering transaction is dispensed with for the purpose of income-tax. If the actual delivery of the goods is not given under the settlement of the contract, then the intention of the parties at the time of the contract is immaterial. Since the delivery of goods was not effected in the settlement of the contracts which resulted in payment of Rs. 16,000 the transactions clearly come within the definition and, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view that the letter dated March 16, 1962, of Ramalinga Choodambikai Mills did not also evidence such a linking in the sense that the supply of 40's was a condition precedent to the assessee agreeing for purchase of 50's by the mills. This is a finding of fact and cannot be challenged in this reference. We are also of the view that the necessity for entering into such contracts or the reason for settling the same by payment of difference in prices is immaterial. If the settlement of the contract was otherwise than by actual delivery of the goods then section 43(5) of the Act is attracted. The section is not qualified in any manner except as regards delivery of the goods in pursuance of the settlement. It was not the case of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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