1977 (1) TMI 49

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..... that the assessee had claimed loss of Rs. 10,176 on purchase and sale of 50 bales of cotton desi through M/s Harji Ram Balwant Singh. He disallowed this item on two grounds: (i) that the transaction of purchase and sale in respect of 50 bales of cotton through M/s. Harji Ram Balwant Singh was a fake and (ii) that the loss incurred represented a speculation loss. The assessee filed an appeal to th .....

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..... e carefully considered their rival contentions. The first point for consideration is whether the loss of Rs. 10,176 claimed by the assessee is a bogus loss. The first ground for holding that the loss claimed is a bogus loss is that the assessee firm did not hold any licence for the purchase and sale of cotton. This is not a valid ground for calling the loss a bogus loss because the transactions we .....

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..... had paid Rs. 5,000 in cash to Ch. Harji Ram Balwant Singh on 20th January, 1971, Rs. 3,601.61 was paid on 31st March, 1971 and the balance at Rs. 1,574.11 was paid subsequently. The entries made in the books of account of the assessee are corroborated by the entries made in the name of the assessee in the books of M/s. Harji Ram Balwant Singh. The loss claimed cannot be held to be a bogus loss. .....

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..... ') in M/s. Hukam Chand sons vs. ITO(2). The learned Departmental Representative, on the other hand, contends that the speculative transaction is actually a combination of two transactions : one for purchase of the bales in question and the second for the sale of the same bales. He, therefore, pleads that the transaction entered into by the assessee did constitute a separate business. I am inclin .....

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..... nsaction would not do. In the instant case, there was only one transaction for the purchase and sale of 50 bales of cotton and this single transaction does not constitute a speculation business. The aforesaid judgment of the Bombay High Court and the order of the Tribunal support the assessee's case. I would, therefore, hold that the provisions of s. 73 are not applicable in respect of the loss of .....

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