9911796707
TMI Blog1968 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Officer refused to treat this loss as a business loss. He found that in no case delivery of the goods was given or taken. He, therefore, treated the loss as a speculative loss. Before the Appellate Assistant Commissioner it was contended on behalf of the assessee that contracts for each transaction of purchase and sale were in the form prescribed by the Indian jute Mills Association and these contracts were settled in each case by giving and taking delivery of pucca delivery orders. The Appellate Assistant Commissioner held that, as in each case delivery was given and taken by exchange of pucca delivery orders, though the entire amount of purchases and sales were paid and received in full in cash, in the absence of actual del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te a business, the business shall be deemed to be distinct and separate from any other business. Explanation 2.-A speculative transaction means a transaction in which a contract for purchase and sale of any commodity including stocks and shares is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. . . " The section clearly stipulates that, in order to be a speculative transaction, the contract must be either periodically or ultimately settled. Secondly, the settlement so effected must be otherwise than by actual delivery or transfer. Mr. Debi Pal, learned counsel for the assessee, contends that, on the facts of this case, the Tribunal should not have followed the decision in W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even at the ultimate stage in a series of chain transactions. The judgment was delivered by G. K. Mitter J. sitting with Masud J. Mr. Debi Pal says that in Wadhana's case the contracts for purchase and sale were between the same parties deliverable on the same day ; but, in the instant case, the contracts were between the assessee, on the one hand, and different parties, on the other. Secondly, says Mr. Pal, Wadhwana's case proceeded on the footing that the contracts were settled and the only question to be decided by the court was whether, by exchange of pucca delivery orders, there was actual delivery within the meaning of Explanation 2 to section 74(1). Mr.Pal contends that, in the instant reference, he does concede that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are clearly transactions which were settled otherwise than by actual delivery and, as such, they were speculative transactions. We cannot overlook that the words used in the section are " actual delivery ". Now, delivery, it is well known, may be actual or constructive. Delivery is constructive when it is effected without any change in the actual possession of the thing delivered, as in the case of delivery by attornment or symbolic delivery. Delivery by attornment may take place in three classes of cases., first, the seller may be in possession of the goods, but, after sale, he may attorn to the buyer, and continue to hold the goods as his bailee ; secondly, the goods may be in the possession of the buyer before sale, but, after sale, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir Lordships of the Supreme Court indicate that " actual delivery ", in cases covered by the passing of delivery orders, takes place when the goods are delivered to the ultimate endorsee. It seems to us, in these premises, that a delivery of a pucca delivery order cannot be " actual delivery " within the meaning of Explanation 2 to section 24(1). Learned counsel for the assessee, as we have seen, strongly relies on this courts judgment in Commissioner of Income-tax v. Ram Chandra Gupta & Co. We are of the view that this decision is not applicable to the facts of the instant reference. In the case, Commissioner of Income-tax v. Ram Chandra Gupta & Co., the Tribunal found that the assessee was an intermediary in respect of sale of jute good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of speculative transaction in Explanation 2 to section 24(1). The word "settled has been held to mean" determined "or" concluded " or " disposed of. According to my Lord, a contract for sale and purchase of jute may be " concluded " and/ or "determined " by delivery of pucca delivery orders ; but it would be a case of a contract " concluded " and/or " determined " without actual delivery of the commodity and would be a speculative transaction within the meaning of Explanation 2 to section 24(1). To my mind these principles should be applied to the facts of the present reference.
The answer to the question, therefore, is in the affirmative. The applicant will pay to the respondent the costs of this reference.
K. L. ROY J.- I agree. X X X X Extracts X X X X X X X X Extracts X X X X
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