TMI Blog2001 (2) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, we find that the expression used in recording the finding has not been used rightly which has resulted in framing of the question not giving out the real controversy and would require to be re-framed. The question relates to the consideration of loss of Rs. 2,73,053 suffered by the assessee on account of transaction carried on by him in respect of sale and purchase of shares. The assessee has claimed that the assessee's firm has purchased through Bharat Bhushan and Company' New Delhi, certain shares and also sold the same shares through the same firm. The assessee has purchased shares for Rs. 15,16,506 and sold the same for Rs. 12,43,058 of Rathi Alloys. The Assessing Officer found that the assessee has not actually paid the purchase price Rs. 15,16,506 to Bharat Bhushan and Company and nor has he received the actual amount of Rs. 12,43,058 from the said dealer, but the assessee has only paid the difference of purchase price and sale price amounting to Rs. 2,73,053. From the above, the Assessing Officer drew the inference that the assessee has only paid loss suffered. The Assessing Officer also observed that it was not clear as to whether the delivery of the shares actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares had been taken. The learned Income-tax Officer himself confused in not understanding the date of contract note and the date of actual delivery of the shares. When the delivery of the shares had been made through vouchers, there was no question of any doubt regarding actual delivery of shares. From the above, it is clear that the appellant had taken actual delivery of the shares through purchase voucher issued by Bharat Bhushan and Co. and this had also been confirmed by Bharat Bhushan and Co. vide letters dated January 20, 1982, and February 21, 1982." Along with this finding, the Commissioner of Income-tax (Appeals) also held that the shares were not actually entered in the register of members in the name of the assessee by lodging transfer form along with the share certificate with the company, but the same were entered in the name of ultimate transferee from the assessee. The blank transfer forms having been received by the assessee along with the share certificate were delivered to the buyer from him and the same were lodged by him with the company for registering the transfer and, therefore, there was no question of getting any dividend in his own name from, the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling the shares as blank transfers. Since the delivery of shares were blank transfers, the question of getting any dividend from the company by the appellant also does not arise since the company sends dividend to the person in whose name the shares are ultimately registered as per section 206 of the Companies Act. The actual delivery of shares having taken place in the purchase and sale of shares, the matter regarding difference having been paid is of no relevance in the determination of the point at issue." These findings of the Tribunal as well as the Commissioner of Income-tax (Appeals) clearly reveals that the actual delivery of shares has been given to the assessee by Bharat Bhushan and Co. and those shares had been actually delivered to the transferee by the assessee along with the blank transfer forms and had ultimately been registered in the name of the transferee from the respondent-assessee who lodged with the company the share certificates along with the transfer form, the instrument of transfer, duly executed by or on behalf of the transferor and the transferee and duly stamped after filling his name for the purpose of registering the shares in his name. The que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an by the actual delivery of the commodity, including stocks and shares in respect of any transaction is the essence of determining whether the transaction is to be termed as a speculative transaction or a non-speculative transaction. The law has been well settled by judicial pronouncement that actual delivery for the purposes of sub-section (5) of section 43 means actual delivery as opposed to notional delivery. The definition of 'delivery' in section 2(2) of the Sale of Goods Act which has been held to include both actual and constructive and symbolical delivery has no bearing on the definition of "speculative transaction" in the Explanation. We would do no better than to reproduce the statement of law made by the Supreme Court in the case of Davenport and Co. (P.) Ltd. v. CIT [1975] 100 ITR 715 overriding the view taken by the Supreme Court in its earlier decision in the case of Raghunath Prasad Poddar v. CIT [1973] 90 ITR 140. While dealing with the Indian Income-tax Act, 1922, the Supreme Court has held as under: "Section 6 of the Indian Income-tax Act, 1922, enumerates the heads of income chargeable to income-tax. Section 24(1) of the Act provides that where an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot speculative in the light of section 30 of the Contract Act.... In enacting Explanation 2 to section 24(1) of the Income-tax Act, the Legislature did not intend to affect any transaction of sale wherein the goods were not physically delivered by the seller to the buyer but only laid down that if there was no actual or physical delivery, the loss, if any, would be a loss in a speculative transaction which could be allowed to be set off only against a profit in a transaction of the same nature.... The object of the Explanation is not to invalidate transactions which are not completed by actual delivery of the goods, but only to brand them as 'speculative transactions' so as to put them in a special category for income-tax purposes." Thus, the court made it abundantly clear that the actual delivery means real as opposed to notional delivery and where the actual delivery of the commodity or the scrips has taken place, there is no room to construe that trans action as speculative transaction. We do not find any support for the contention raised by the Revenue that because shares have not ultimately been registered in the name of the assessee and dividends have not been paid to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer on such terms as to indemnity as the Board may think fit: Provided further that nothing in this section shall prejudice any power of the company to register as shareholder or debenture holder any person to whom the right to any shares in, or debentures of, the company has been transmitted by operation of law. (1A) Every instrument of transfer of shares shall be in such form as may be prescribed, and- (a) every such form shall, before it is signed by or on behalf of the transferor, and before any entry is made therein, be presented to the prescribed authority, being a person already in the service of the Government, who shall stamp or otherwise endorse thereon the date on which it is so presented, and (b) every instrument of transfer in the prescribed form with the date of such presentation stamped or otherwise endorsed thereon shall, after it is executed by or on behalf of the transferor and the transferee and completed in all other respects, be delivered to the company,-- (i) in the case of shares dealt in or quoted on a recognised stock exchange, at any time before the date on which the register of members is closed, in accordance with law, for the first time af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which in fact has taken place between its shareholders/debenture holders and other persons and subsequent transfers which have otherwise taken place in accordance with the law of transfer of movable property. In this connection reference may be made to the case of Howrah Trading Co. Ltd. v. CIT [1959] 36 ITR 215 (SC). The question had arisen under the corresponding provision under the Companies Act, 1913. The court said that the transfer of shares of a company takes place either by a fully executed document such as is contemplated by regulation 18 of Table A of the Companies Act, 1913, or by what are known as "blank transfers". In such blank transfers, the name of the transferor is entered and the transfer deed signed by the transferor is handed over with the share scrip to the transferee, who, if he so chooses, completes the transfer by entering his name and then applying to the company to register his name in place of the previous holder of the share. The company recognises no person except one whose name is on the register of members, upon whom alone calls for unpaid capital can be made and to whom only the dividend declared by the company is legally payable. Of course, betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
