TMI Blog1976 (5) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee ? " The assessment year is 1961-62. The accounting period ended on November 7, 1961. The assessee is a firm. The facts stated and found by the Tribunal may be briefly stated as follows : The firm is a dealer and a jute broker. Several contracts for sale and for specific delivery of jute goods by instalments were entered into by the firm in the accounting year. In this reference, we are concerned with only one contract, namely, the contract between the firm and Messrs. Khardah Co. Ltd. The firm failed to deliver those goods on due dates and committed a breach of the said contract and became liable to pay Rs. 1,79,200 as damages to M/s. Khardah Co. Ltd. in the accounting year. The Income-tax Officer has rejected the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation 2 to section 24(1) of the Indian Income-tax Act, 1922, meant a real as opposed to a notional delivery of the goods or the scrips. The said Explanation does not invalidate the speculative transactions which are otherwise legal but categorises them in a separate group for the purposes of the Income-tax Act as held by the Calcutta High Court in the case of D. M. Wadhwana v. Commissioner of Income-tax [1966] 61 ITR 154 (Cal) and followed by the Supreme Court in Davenport's case [1975] 100 ITR 715 (SC) by dissenting from its earlier view in the case of Raghunath Prosad Poddar v. Commissioner of Income-tax [1973] 90 ITR 140 (SC). Raghunath Prosad Poddar's case [1973] 90 ITR 140 (SC) was also on pucca delivery orders like Wadhwana's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court. Section 43(5) of the Act reads as follows : " 'Speculative transaction' means a transaction in which a contract for the purchase or 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. Save as to an arbitration clause, a breach puts an and to the contract and creates a liability in damages. No question of delivery of goods can ever arise after the contract is killed by its breach. Though the parties can enter into a settlement contract for delivery of goods, it does not revive the old contract, for it is a new contract between them and new rights and liabilities flow from it. Section 43(5) of the Act does not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax [1974] 96 ITR 401 (Mys). In the premises and by following the above decisions of this court, we return our answer in the affirmative and in favour of the assessee by overruling the contentions of Mr. Pal. The parties shall pay and bear their own costs. DIPAK KUMAR SEN J.--I would like to add the following as additional reasons in support of the answer given to the question. Needless to say, I agree with the reasons contained in the judgment already delivered by my learned brother. Even if an extended meaning is given to section 43(5) of the Act, as suggested by Mr. B. L. Pal, the contract which the assessee had with Kesavdeo Shyamsunder cannot, in any event, be stated to be a speculative transaction. In this contract, out o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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