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TMI Blog1975 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... elephonic instructions which were issued by the assessee to M/s. Ispahani Ltd., a company at Calcutta which was carrying on business as exporters of hessian to foreign buyers, M/s. Ispahani Ltd. purchased 900 bales of jute on December 11, 1953, and intimated the assessee-company as follows : " Bought for you 900 bales Hessian cloth 40 " x 10 " oz. @ Rs. 46-10-0 per 100 yds. January delivery." The transaction was acknowledged by the assessee-company by its letter dated 18th December, 1953. It appears that this purchase of 900 bales by M/s. Ispahani Ltd. on behalf of the assessee was in fact a part of a larger purchase of 1,500 bales by it (M/s. Ispahani Ltd.) from M/s. Girdharlal Co. on 11th December, 1953. It further appears that M/s. Girdharlal Co. issued a pucca delivery order for 1,500 bales to M/s. Ispahani Ltd. on January 30, 1954. M/s. Ispahani Ltd. debited the total cost price of the said bales (1,500 bales), viz., Rs. 13,98,750 to its gunny account and the said amount was paid by M/s. Ispahani Ltd. to M/s. Girdharlal Co. by cheque on the Eastern Bank. On February 2, 1954, M/s. Ispahani Ltd. informed the assessee-company that they were holding 900 bales of hessia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Assistant Commissioner to make further enquiries and consider further evidence and decide the principal point afresh. The Tribunal observed that the evidence which consisted of correspondence that was produced was equally capable of construction of the goods having been actually purchased and taken delivery of as well as goods having been actually sold and given delivery of, and it felt that further enquiries were necessary to be made before the loss in question was held to be speculation loss within the meaning of section 24(1) of the Indian Income-tax Act, 1922. In his own turn the Appellate Assistant Commissioner by his order dated January 29, 1960, directed the Income-tax Officer to submit a remand report. Pursuant to the order of the Appellate Assistant Commissioner after making due enquiries and after considering the certificate dated July 8, 1959, from East India Commercial Co. Pvt. Ltd. filed by the assessee before him at that stage, the Income-tax Officer submitted the remand report ultimately supporting the earlier view taken by him. The matter was then considered by the Appellate Assistant Commissioner in the light of the remand report. Before the Appellate Assistan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and were holding such stocks continuously till they were disposed of under the instruction of the assessee. Counsel for the assessee also made a fair concession before the Tribunal that at one time during the period February 1, 1954, and March 31, 1954, stocks in ready held by M/s. Ispahani Ltd. in its general hessian purchase account were less than 900 bales. Proceeding on the assumption that tendering of pucca delivery order received from a mill amounted to delivery of goods in ready and further proceeding on the basis that M/s. Ispahani Ltd. was acting all along as agent of the assessee in the transaction of purchase and sale of 900 bales, the Tribunal found it impossible to hold that the assessee at any time took actual delivery of 900 bales or that there was any transfer of that commodity to it. It took the view that the bill given by M/s. Girdharlal Co. to M/s. Ispahani Ltd. was between the two parties and beyond Ispahani Ltd.'s statement that it included 900 bales purchased on behalf of the assessee there was nothing to earmark that lot of 900 bales from the total lot of 1,500 bales purchased by Ispahani Ltd. From the letter dated 9th November, 1956, which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of this contention strong reliance was placed upon the decision of the Supreme Court in Raghunath Prasad Poddar v. Commissioner of Income-tax. Mr. Munim pointed out that in that case the assessee, a dealer in jute and jute goods, purchased pucca delivery orders relating to gunny bags from various parties after paying the full price of the goods covered by the order and transferred those orders to buyers after receiving the price fixed for the sale of those goods and the Tribunal's view that since the goods covered by the delivery orders were not actually delivered to the buyers the loss incurred in those transactions was speculative as contemplated by section 24(1) of the Act, was negatived by the Supreme Court. He further pointed out that the Supreme Court has held that to effect a valid transfer of commodity it was not necessary that the transfer in question should be followed up by actual delivery of the goods to the transferee and that even if the goods were delivered to the transferee's transferee, the first transfer would be a valid transfer and would not be a speculative transaction, and he urged that the same principle should be invoked in this case. In our view, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 953, and had obtained from M/s. Girdharlal Co. a pucca delivery order for 1,500 bales and out of 1,500 bales 900 bales were purchased for and on behalf of the assessee-company and in the absence of earmarking or appropriation of particular lot of 900 bales towards the contract it is difficult to comprehend as to how the transaction could be said to have ripened into a purchase and if it did not it merely remained an agreement to purchase and, while the transaction remained so, the bales were agreed to be sold in two lots of 600 and 300 back to M/s. Girdharlal Co. At both stages the transactions merely remained as agreements to purchase and sell and after squaring up such transactions the difference, being the loss, was paid by the assessee which in our view has been rightly regarded as speculative loss by the Tribunal. If a separate or split pucca delivery order for 900 bales had been obtained by Ispahani Ltd. from Girdharlal Co., the position would have been different; having obtained an omnibus order for 1,500 bales there should have been some earmarking of the lot of 900 bales towards the contract of purchase effected on behalf of the assessee which would have had the effe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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