TMI Blog1947 (9) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer originally disallowed the loss in speculation upon his view that the assessee does not carry on any business in speculation and also because he was not satisfied that all the accounts to support the figures of the loss claimed at ₹ 1,28,814 had been produced. This order was set aside by the Assistant Commissioner in appeal. The case was reminded to find out whether the assessee entered into these transactions with a view to make a profit and whether his activity in speculation was so continuous as to amount is carrying on of a business; the Income-tax officer was also directed to ascertain whether any capital had been set apart for speculation purposes. The Income-tax officer on remand after examining the relevant in almost contract papers, bijaks and account books came to the conclusion that the registered firm entered into these transactions frequently and regularly in almost all the months of the accounting year with the object of making profits, but the amount of capital set apart for speculation could not be ascertained as the firm had mixed up the accounts of this business with other businesses, and the firm was found utilising the capital both for speculat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n not so set off shall be carried forward to the following year and set of against the profits and gains of the assessee, if any, from the same business, and if it cannot be wholly set off in year, the portion not set off shall be carried forward in the next year and so on. The contention of the Assessee is that the loss sustained by the registered firm was a loss in the carrying on of their business as merchants in 1941-42, and as that business was also carried on in the next year and also in the following year, the assessee is entitled to claim that set-off to the extent that it can be set off against his profits of the next year and the balance, if left, will be carried forward to be set off against the profits of the next year. The contention of the department, on the other hand, is that the loss due to speculation was a loss in a new business started by the registered firm in 1941-42 wholly independent of their business as merchants and, therefore, this loss can only be set off against the income from speculation in the following year or years and as there was no income or negligible income only in the following years under this head, the assessee cannot be allowed to set off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other hand the Master of the Rolls, Lord Sterndale, said in Curries case : Where it is a question of degree there should be an intermediate stage where somebody must make up his mind whether or not it is a question of fact. But there does come a point at on end where there is no evidence to support the proposition, that is, when the affirmative is quarreled with, and, where the negative is quarreled with, there may be cases where the facts are so completely all one may and the state of facts is so clear that the plain legal result can only be that what is established is, to take this present case, the carrying on of a trade. Rowlatt, J., applied this observation in Copper v. Stubbs, in refusing to accept the finding of the Commissioners that the dealings by way of speculation in buying and selling future in cotton were not carrying on of a trade and thought that what the Commissioners had done was merely to give the wrong name to a state of fact which in law amounted to something else. I draw attention to two decisions of the Privy Council. In Ramgopal v. Shamskhaton, it was held had the second appellant Court had not exceeded its powers by reversing the decisions of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta or Madras or at Ranchi. In short, there is no challenge to the statement of the assessee at page 22 that these different departments were only ramifications of the same staff who controlled and managed the business at each centre in the same place. Now, how does a business man speculate ? Take the case of a future delivery cotton contract. It is stated by high authority in the case of Thacker v. Hardy that future delivery contracts which are made upon the Cotton Exchange or the contracts which are made upon the Stock Exchange in London are real contracts in the sense that the party with whom they are made is real party, and if the dealer or broker making them should desire at any moment to have the contract implemented he can do so. There is no distinction between contracts which are made forth real purposes of securing the sale or purchase of stock or cotton - see the observations of the Master of the Rolls in Cooper v. Stubbs. This being the position, I am of the opinion that when the registered firmentered into future delivery contracts it did not embark upon anew kind a business or anew undertaking. It was still carrying on the business of merchants. A merchants may buy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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