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TMI Blog1976 (12) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... s to below. He estimated the kernal yield at 77.5% which resulted in an addition of Rs. 69,872. Similarly, he estimated the yield of oil at 43% and made an addition of Rs. 1,20,230. In appeal, the Appellate Assistant Commissioner accepted the yields of kernal but fixed the yield of oil at 42.66% and sustained an addition of Rs. 47,000 on that basis. 3. Before us, Sri Swamy, the learned counsel for the assessee, has contended that the assessee's book results were accepted in all the past years, that the yield results shown this year compared favourably with the results of the earlier years, that the assessee has maintained a yield book, that the departmental offices have not pointed out any defects in the accounts of the assessee and that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation loss. The assessee entered into a number of contracts for the sale of groundnut oil with different out-station parties who were situated in places like Cuddapah, Kakinada, Bombay, Vizianagaram, Earnakulam etc. Due to lack of wagon facility, the assessee could not effect deliveries on the stipulated dates with the result that it had to settle the contracts by paying the price differences. Such payments totalled Rs. 90,119 which was claimed as a deduction in the computation of business income. The ITO disallowed the claim holding that since the payments arose from the settlement of contracts otherwise than by delivery of goods, the loss incurred was speculation loss and could not be set off against income from result business. In appa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss from a speculation business against the profits and gains of other business, cannot come into play. He has also submitted that since the assessee had settled the contracts by delivery of goods to a substantial extent, the loss arising from settlement of the unfulfilled contracts has to be treated as loss from ready business to which the contracts relate in terms of the Circular of the CBR, dt. 12th Sept., 1960 (Circular No. 23 of 1960). He has relied on some orders of the Tribunal in support of his submissions. For the Department, reliance is placed on the orders of the lower authorities. 7. On a careful consideration, we are of the opinion that the claim of the assessee for set off of the loss against the income from ready business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular case, Sri Rangayya, the learned Departmental Representative, has laid emphasis on the fat that the contracts in which the settlement was reached without delivery of goods were as many as 13 and that by itself shows that the assessee was including in this type of Transactions as a normal business feature which makes it a distinct business by itself. 8. We do not think we can accept this view. "Business" is defined in s. 2(13) in the following terms: "'Business' includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture:" The Supreme Court in Narayana Swadeshi Wvg. vs. Commissioner of Estra Profits Tax, said that the word "business" connotes some real, substantial and system ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the purpose of the transaction of purchase and sale is clearly discernible. Motive is never irrelevant in any of these cases. What is desirable is that it should be realised, clearly that it can be inferred from surrounding circumstances in the absence of direct evidence of the seller's intentions and even, if necessary, in the face of his evidence." 10. What energes from the above decisions is that for the purpose of finding whether a transaction constitutes trade or adventure in the nature of trade, in other words, a business activity, one cannot ignore the object and the motive behind the transaction. In the case before us there is no dispute that the assessee entered into the transactions in question with the intention of maki ..... X X X X Extracts X X X X X X X X Extracts X X X X
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