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TMI Blog2007 (1) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... t other 22 transactions of cotton bales took place which were held by the AO to be speculative transactions. Profit and loss arising therefrom were held to be speculative profit or speculative loss to be treated accordingly under the provisions of IT Act, 1961. For treating the said transaction to be speculative reliance was placed by the AO on section 43(5) of the Act of 1961 which provides that any transaction of sale and purchase of goods, if is settled on due date or otherwise in any manner otherwise than by actual delivery of the goods is to be treated a speculative transaction and profit or loss arising out of such transaction is to be considered the speculative profit or speculative loss. The other facts which are necessary for the present purpose are that out of 22 transactions, 14 transactions related to the purchase of certain cotton bales through M/s Jairamdas Lokesh Kumar, commission agent. The physical goods in existence were belonging to M/s Ramchandra Jagdish Prasad, the firm situated at Shri Vijaynagar District Sri Ganganagar and were lying in his godowns. On the very same date the said cotton bales were sold by the assessee through the same commission agent on 22nd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by Aadatias or commission agent on behalf of assessee. The only test to find out whether the Aadatias or commission agent working on behalf of assessee had taken actual delivery of goods is by ascertaining transportation charges paid. Since from the perusal of the copies of the accounts of transactions through M/s Jai Ramdas Lokesh Kumar which was taken to be an illustrative case of modus operandi showed that commission and brokerage has only been charged and in none of the transaction accounts any transportation charges have been charged either at the time of purchase or sale. This itself shows that the Aadatias or commission agent had not taken the actual delivery of goods on behalf of the assessee and only the purchase and sale details or delivery notes were exchanged in the books of commission agent in the running account of the assessee. The purchase price and sale price have been debited and credited respectively and ultimately the assessee had paid only the difference between the two to his commission agent. On the basis of aforesaid reasoning it was found that since there was no actual delivery of the goods taken by the Aadatia or commission agent ultimately MI s Jair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se actual physical delivery was not taken by any of the agents or the principal directing the purchase and sale of the 100 bales of cotton to M/s Jairamdas Lokesh Kumar. Learned counsel for the appellant has initially pressed into the service the contention that since 100 bales of cotton were ascertained at the godowns of M/s Ramchandra Jagdish Prasad to be dispatched to the ultimate buyer M/s Oswal Cotton Company for whom Sri Hukamchand Ojha & Co. had purchased 100 bales of cotton from said M/s Jairamdas Lokesh Kumar who has conducted sale as per direction of assessee and. therefore. it must be taken that the physical delivery of goods was taken by M/s Jairamdas Lokesh Kumar when he ascertained and segregated the goods for the purpose of dispatching the same to M/s Oswal Cotton Company, which satisfies the test of actual delivery of the goods to the assessee. In the alternative it is contended by the learned counsel for the assessee that in terms of section 43(5) of the Act of 1961 the requirement is not that physical goods must be taken by the assessee himself but the emphasis is on the fact that transactions entered into by assessee must ultimately culminate into the physical d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent rather than considering whether transactions entered by the assessee were ultimately settled by delivery of goods or otherwise. 9. If we consider the modus in which the transactions have proceeded it leaves no room of doubt that ultimately they resulted in actual delivery of goods only in pursuance to said transactions. Actual delivery of goods was not independent of transaction conducted at the instance of the assessee. The transactions of sale and purchase of commodities entered by the assessee through his commission agent or agents whether at Sri Ganganagar or at Punjab have been settled by actual delivery of was to the last person in the chain and not otherwise than by actual delivery of the goods. The fact that the account of the assessee with his agent or commission agent has been settled on commercial principles by finding out what is the cost incurred on behalf of the assessee and what payment he has received on behalf of the assessee is not relevant for the purpose of determining the actual nature of transaction nor what charges have actually been debited to the assessee's account by the principal seller of the goods is relevant. The other may be relevant for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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