TMI Blog1966 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assessee is a partnership firm having business in paper bags, gunny bags and other commodities. During the relevant previous year it had entered into transactions in gunny bags entailing purchase and sale of delivery orders. This was done according to the prevailing practice in the Calcutta jute trade where formal transactions in gunny, hessian, etc., are carried on by the transfer of the relative delivery orders only on full payment of the purchase or sale prices. There is no actual delivery of the commodities and this happens because of the fact that the manufacturers of the jute goods do not normally come into contact with the shippers, namely, the exporters. It is only through chain of contacting parties for the jute goods from the manufacturers that the shipper obtains goods from the manufacturer. The intermediaries actually effect delivery by transferring ,the delivery orders and the assessee is one of such intermediaries. It is an admitted fact that no delivery of goods was either given or taken by the assessee who suffered loss of Rs. 33,736 out of such transaction entered into during the relevant accounting year. In Explanation 2 to section 24(1) of the Indian Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into by persons who habitually dealt in jute goods which involved actual delivery of possession. It is said that in Dunichand's case actual delivery was held to be factual or symbolic delivery of goods. Such meaning of actual delivery is consistent with the meaning of delivery of goods in Sale of Goods Act. Counsel for the revenue further contended that in Explanation 2 to section 24(1) of the Indian Income-tax Act the words " actual delivery or transfer of the commodity " meant transfer of title and change of ownership and unless the goods were ascertained there could be no transfer of title. It is said that a delivery order was not a document of title and a transfer of delivery order would not be a transfer of goods unless the goods were ascertained and set apart. In other words, the contention was that, in order to constitute a transfer of ownership, first, there was to be a legal transfer of title and, secondly, the goods must be ascertained and these could not be effected by delivery order. It should be noticed that these contentions introduce new meanings to delivery or transfer of goods. Counsel for the assessee, on the other hand, contended that the basis of a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs did not involve as between the intermediate parties actual delivery of possession of the goods. The Supreme Court held that the word " involving " occurring in the enactment meant resulting in and if the chain of contracts as entered into the market resulted in actual delivery of possession of goods a transaction would be beyond the mischief of the Ordinance. According to the Supreme decision, these intermediate contracts were not within the mischief of the Ordinance, because there was ultimately actual transfer of the goods. In the present case the finding is that the assessee is an intermediary and intermediaries actually effect, delivery by transferring delivery orders and, further, that in the chain-contracts to which the intermediaries are parties shipper or the exporter obtains goods from the manufacturer. These facts establish that delivery oders in the facts of the present case have passed through the string-contracts on payment of full price and that is how intermediaries effect delivery or transfer of goods and finally the shipper obtains goods from the manufacturer. Counsel for the revenue contended that the word " settled " occurring in Explanation 2 to section 24( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 2 to section 24(1) of the Indian Income-tax Act, A delivery order may be sufficient to amount to delivery of goods and it is a question of fact as to when parties intended title should pass. Counsel for the revenue also relied on the decision of the Supreme Court in Jule and Gunny Brokers Ltd. v. Union of India , in support of the contention that in a contract represented by the pucca delivery order or a contract for the sale of unascertained goods, no property in the goods was transferred to the buyer until the goods were ascertained by appropriation. The Supreme Court found in that case on the evidence that the goods covered by the pucca delivery order were not ascertained at the time such orders were issued and also that ascertainment took place in the shape of appropriation when the goods were actually delivered in compliance therewith. It was observed in the case of Anglo-India Jute Mills Co. v. Omademull, that it would depend upon evidence whether the goods have been ascertained and Jenkins C.J. said that the question whether property had passed as between the original seller and the buyer was not required to be examined and that the sellers were bound by their repres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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