9911796707
TMI Blog1981 (7) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... Co., was a firm engaged in the business of export of brassware and handicrafts. The accounting year with which we are concerned is the period from April 1, 1964, to November 10, 1964. Some time during this accounting year (the exact date is not available), it appears that the market rate of zinc, which the assessee was entitled to import under a licence available to it, was Rs. 2 to Rs. 2.10 per kg. At that time the assessee entered into a forward contract of sale with two Moradabad parties, M/s. Hansraj Dharam Pal Jain and M/s. Standard Metal industries. By these contracts the assessee sold 20,000 kgs. of zinc to each of the parties to Rs. 2.25 per kg., the delivery to be effected in October, 1964. By the time the assessee obtained the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an appeal to the Appellate Tribunal and contended that the sum of Rs. 30,000 should not have been allowed because it was loss in speculative transactions, i.e., transactions which had been settled otherwise than by actual delivery. On the other hand on behalf of the assessee reliance was placed on the decisions referred to by the AAC. The Tribunal disposed of the matter by para. 3 of its order. "We do not find any ground for interfering with the order of the Appellate Assistant Commissioner in this regard. The genuineness of the transactions is no longer in doubt. According to the confirmatory letter issued by Hans Rai Dharam Pal Jain, the amount of Rs. 15,000 was paid long after the delivery was due. Even the liability was accepted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nning to settle after breach or which it had become its normal practice to settle by payment of difference. These were stray transactions which the assessee closed in particular manner due to exigencies arising out of its old business. But that did not convert these stray transactions into a separate and distinct business. On this ground also the loss was clearly allowable." From the order of the Appellate Tribunal a reference to this court was sought by the Commissioner. In his application for reference, the Commissioner wanted three questions to be referred to this court : " (1) Whether, on the facts and in the circumstances of the case, there was any material for the Tribunal to hold that there was a valid transaction between the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich we now find has been followed in large number of cases. " Daulatram Rawatmull v. CIT [1970] 78 ITR 503 (Cal), Raghunarayan Rice Mills v. CIT [1970] 75 ITR 682 (Orissa), Bhandari Rajmal Kushalraj v. CIT [1974] 96 ITR 401 (Mys), CIT v. Indian Commercial Co. P. Ltd. [1977] 106 ITR 465 (Bom), CIT v. Arun General Industries Ltd. [1977] 110 ITR 286 (Cal), CIT v. Ramjeewan Sarawgee Sons [1977] 107 ITR 845 (Cal), Thakurlal Shivprakash Poddar v. CIT [1979] 116 ITR 190 (MP) and CIT v.. Anglo-Indian Jule Mills Co. Ltd. [1980] 124 ITR 384 (Cal). The Tribunal, however, did not stop with this. It also rested its conclusion on second alternative ground which proceeded on the assumption that the assessee had entered into a transaction of a specula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous, the Tribunal could be said to be correct in deleting the disallowance made by the ITO. On behalf of the Department it was contended that the question was wide enough to take in all aspects of the decision of the Tribunal. We are unable to agree. Nor do the questions on which the Commissioner sought a reference advert to this aspect. The first question is of no direct relevance. The second question canvasses the finding that the transactions were speculative transactions and the third question challenges the correctness of the finding of the Tribunal that the compensation paid for breach of contract could not be treated as a speculative loss following the decision in Pioneer Trading Company's case [1968] 70 ITR 347 (Cal). The sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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