TMI Blog1995 (2) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ks), kultan, sutli, etc. In other words, the firm is doing business in jute products. For the assessment year 1966-67, the assessee had debited its profit and loss account by an amount of Rs. 31,988 being the loss on account of a hedging transaction in the bardan account. The Income-tax Officer, however, held, on going through the accounts, that the assessee, although it had the requisite stock of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent this would not prevent such a transaction from being considered as a hedging transaction. The Tribunal, therefore, held that the loss in question should be treated as a hedging loss and not as a speculation loss. From this decision of the Tribunal, the following question has been referred to us under section 256(1) of the Income-tax Act : " Whether, on the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im or merchandise sold by him shall not be deemed to be a speculative transaction ". In connection with this provision, the Central Board of Direct Taxes, by its Circular No. 23, dated September 12, 1960, has clarified for the benefit of the Department that hedging transactions in connected, though not the same commodities should not be treated as speculative transactions. It has directed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. The assessee has drawn our attention to annexure "B" to the paper-book setting out the bye-laws contained in Chapter VII of the East India Jute and Hessian Exchange Ltd. Hedging contracts in this commodity, therefore, have to be in the standard form set out there. The standard form prescribes a certain quality of bardan. Hence, the assessee has entered into hedging contracts of that quality of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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