TMI Blog2005 (2) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... rm suffered a loss of Rs. 40,936 in such forward contracts. The AO treated this loss as speculative loss and made the addition. 3. In appeal, this addition was deleted. The Department has challenged this deletion. 4. The learned Departmental Representative, Shri R.I. Patel, has submitted that the loss in this case can be taken to a speculative loss only as without the goods, the purchase is done in advance, even prior to the production of the goods. 5. The submission of the learned Authorised Representative, Shri Suresh Ojha, is that the Cotton Corporation of India Ltd. (in short CCI), sold Binola in the open auction, in advance, even before the production of the same. The delivery by CCI to the buyer is given later on, when the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any commodity, it is not necessary that actual delivery of goods should follow. In case the goods were directly transferred to the transferee, the first transfer would also be a valid transfer and would not be an speculative transaction. 8. In the case of CIT vs. Ramchandra Shiv Narain (1993) 114 CTR (Bom) 323 it has been held by Hon'ble Bombay High Court that the loss incurred in forward contract, entered into by the assessee in the course of its merchandise business to guard against loss by future fluctuations in the prices, is covered by proviso (a) to s. 43(5) of the Act and, therefore, in such forward contract is a business loss and not a speculative loss. This view is also supported by the decisions of the Hon'ble Rajasthan High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2911 (plot No. 57), dt. 30th March, 1991, As per narrations given by the assessee in detailed copy of this account and as per Sale bills issued by the CCI, to M/s Nav Bharat Krishi Udhyog (P) Ltd., to whom the CCI entered into an agreement for sale of its cotton seeds, it is clearly established that the cotton seed were taken out from the ginning factory on 20th March, 1991, vide gate pass Nos. 40/82 and 40/83 and as per the detailed copy of this account filed by the assessee, the last sale was made by it on 15th March, 1991, vide bill No. 158 to M/s Visha Traders, Hanumangarh, and there is no such sale after 15th March, 1991. In view of the above facts as revealed from the books of the assessee itself, the purchases made by it from M/s Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of Rs. 3,25,000 by the appellant in those accounts. It is thus contended by the appellant that carrying outward commodities vide gate pass Nos. 40/82 and 40/83 have not been taken by the appellant but by the partners of M/s Nav Bharat Krishi Udhyog (P) Ltd. Owing to this error, the AO came to the conclusion that the commodities were taken out by the appellant, which were not reflected in the stock register. The appellant further contents that if the delivery of the said quantity of Binola had been taken by the appellant from CCI for Rs. 4,98,100, why should it make payment of Rs. 3,25,000 to CCI for this purpose. It seems that there were some auditing errors in the accounts furnished before the ITO by M/s Nav Bharat Krishi Udyog (P) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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