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TMI Blog1980 (8) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ss income of the assessee ? " The assessee is a dealer in cotton. It purchases raw cotton, gins the same and sells cotton and seeds. On 29th November, 1969, the assessee entered into two contracts for sale of, 200 cotton bales to M/s. Rallis India Ltd., The rate in respect of one, contract was Rs. 1,381 per candy of 784 lbs. For the other contract, the rate was Rs. 1,380 per candy. The cotton bales were to be delivered under both the contracts on 15th January, 1970. The assessee did not deliver the bales in accordance with the contracts on which M/s. Rallis India Ltd. asked the assessee by two notices dated 28th January, 1970, and 6th February, 1970, to supply the cotton bales. The assessee offered 200 bales of cotton on 6th March, 1970, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gle transaction did not amount to a speculation business within the meaning of s. 73(1) of the Act and there was no bar for setting off the loss incurred in the said transaction against the income of the same year from the other business of the assessee. Section 2(13) of the Act defines " business " to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. Explanation 2 to s. 28 provides that: "Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as " speculation business " shall be deemed to be distinct and separate from any other business. The expression " speculative transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on profit. Having purchased a commodity at a cheaper rate or expecting to purchase it at a cheaper rate, the selling dealer contracts to sell a specified quantity of that commodity at a higher rate to the purchasing dealer who, in his turn, hopes to re-sell it at a further higher rate. The quality of these transactions being trading, transactions did not change simply because the market rose and the assessee could not fulfil the contracts and had to settle them by paying the difference of Rs. 13,500 as damages. The transaction under which the assessee paid Rs. 13,500 to M/s. Rallis India Ltd. was a continuation of the adventure of trade which began on entering into the contracts. It is immaterial that by this transaction the assessee coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting provision in the Explanation will apply where " speculative transactions " carried on by an assessee are of such a nature as to constitute a business. But much significance cannot be attached to the use, of the expression " speculative transactions " in plural, for, as enacted in s. 13(2) of the General Clauses Act, 1897, the words in the singular include the plural and vice versa, Consistent with the presumption contained in s. 13(2) of the General Clauses Act, the expression " speculative transactions " should be read to means " speculative transaction or transactions ". There is nothing in the context of Expln. 2 to show that to, constitute a speculation business a different definition of " business " from that as given in s. 2(13) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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