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TMI Blog1967 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... dy for spot delivery as also for delivery in Vaida dates. The sales of oils were also made on the same basis by the assessee. All these contracts, ready and forward, are on a large scale and are put through either the Alleppey Oil Millers' Association, commission agents or other merchants. The aforesaid contracts are of two varieties ; those on which delivery was intended and those intended to be settled on the Vaida dates, only for price differences. The latter type, forward contracts, for purchase or sale, are all entered in a single account called " Oil Vaida Price Difference Account ". During the calendar years 1952 and 1953, which are the " previous years " corresponding to the assessment years 1953-54 and 1954-55, the assessee entered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ward contracts in cocoanut oil in which also he traded during the calendar years ended 1952 and 1953, the previous years for the respective assessment years 1953-54 and 1954-55, are deductible as business losses under section 10 in the respective assessments ?" Thereupon the President made a reference under section 5A(7) of the Act to three other Members of the Tribunal including himself. All the three members agreed with the Judicial Member and held that the two sums mentioned are not deductible as business losses under section 10 of the Act. At the instance of the assessee, the Appellate Tribunal referred the following questions of law for the opinion of the High Court under section 66(1) of the Act : " (1) Whether there are materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing the total income of the firm under section 23(1), (3) or (4). It was further held in that case that speculation loss of a registered firm kept apart under the first proviso to section 24(1) in computing its total income for one year could not be apportioned between the partners and the registered firm could claim to carry forward such loss and have it set off against speculation profits of the firm of a later year in accordance with section 24(2). As regards the first question, the High Court took the view that the finding of the Appellate Tribunal that the transactions are speculative transactions and not hedging transactions seemed to be based on a misapprehension of the ambit of the assessee's business. It was observed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, there is the admission of the assessee before the Appellate Assistant Commissioner that he was carrying on two different businesses--one of cocoanut oil and the other of speculation in cocoanut oil. By its remand order dated November 29, 1956, the Appellate Tribunal directed the Appellate Assistant Commissioner to ascertain whether the speculative transactions could be said to constitute " hedging " operations and part of the normal trading activity of the assessee. After receipt of the remand order the Appellate Assistant Commissioner required the assessee to produce a full account of the " hedging " transactions out of the " oil satta price difference account " maintained in his books of account. The assessee was req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured by him or merchandise sold by him ; or (b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations ; or (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member ; shall not be deemed to be a speculative transaction. " It is manifest that the burden of proof was upon the assessee to show that the transactions are merely hedging transactions within the meaning of proviso (a) and in the absence of any evidence produced on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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