TMI Blog1979 (2) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... oth ready and forward business. The assessee's accounting year relevant to the assessment year 1961-62 is the one ending on July 31, 1960. During this year the assessee-company claimed loss of Rs. 1,08,222 in forward transactions in jute and hessian. The case of the assessee-company initially before the ITO was that they were in the nature of hedging transactions and so this loss could be set off against other business income of the assessee-company. This plea was negatived by the ITO. He held that this loss had been suffered by the assessee in certain forward transactions where differences only had been, paid and actual delivery of the goods had not been given or taken. In: his view, therefore, these were speculative transactions as define ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana v. CIT [1966] 61 ITR 154 and, applying Expln. 2 to s.24(1), held that these transactions must be regarded as speculative inasmuch as they were settled otherwise than by actual delivery of the goods in respect of which they were entered into. He also found the apportionment made by the ITO in order inasmuch as necessary details were not furnished by the assessee even before the AAC. The assessee carried the matter in further appeal to the Tribunal. The Tribunal considered the provisions of s. 24(1) of the Indian I.T. Act, 1922, and held that the transactions pursuant to which loss had accrued to the assessee fell squarely within Expln. 2 to s. 24(1). In the view of the Tribunal this Explanation was exhaustive and did not permit the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in Raghunath Prasad Poddar's case [1973] 90 ITR 140. In Davenport Co.'s case [1975] 100 ITR 715 (SC), the observations of the Calcutta High Court in D. M. Wadhwana's case [1966] 61 ITR 154, on which reliance was placed by the Tribunal, have been extracted with approval. In the words of the Supreme Court, the passage which is quoted by the Tribunal represents the correct statement of the law. It may be noted further that the decision in Davenport Co.'s case [1975] 100 ITR 715 (SC), has been considered by a Division Bench of this court (to which I was a party) in CIT v. Indian Commercial Co. P. Ltd. [1977] 106 ITR 465. The Supreme Court decision in Davenport Co.'s case [1975] 100 ITR 715, has been read and explained in that decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssly so held in our judgment in Seksaria Riswan Sugar Factory Ltd. v. CIT (Income-tax Reference No. 111 of 1970 decided on 5-2-1979) [1980] 121 ITR 196. Applying the principles laid down clearly by the Supreme Court in Davenport Co.'s case [1975] 100 ITR 715, the contentions advanced on behalf of the assessee cannot be accepted and the transactions, where delivery is not effected but differences paid will have to be regarded as speculative transactions in view of the language employed in Expln. 2 to s. 24(1). If that be so, the ITO, the AAC and the Tribunal were all right in holding that the loss suffered by the assessee in such transactions could not be set off against its other income but would be required to be considered separately as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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