TMI Blog1999 (1) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... se and sale of shares alongwith the names and complete address of the parties from whom these shares were purchased. The appellant filed copies of purchase and sale of shares showing that 190 shares of ACC were purchased from M/s. Bharat Bhushan Company, share broker, New Delhi and 4000 shares of Kular Construction Company were purchased from M/s. Deepti Chawla Company, Stock, Share and Finance Brokers, New Delhi. The Assessing Officer observed that the shares were allegedly shown to have been sold to the same parties from whom shares were purchased. The copies of account of both the share brokers were kept on record. The Assessing Officer observed in accordance with the Bye-laws of Delhi Stock Exchange and as per Bye-Laws, the bargain of shares is either for 'Spot Delivery' i.e., delivery and payment on the same day or on the next day or "Hand Delivery" i.e., delivery and payment within a maximum period of 14 days following date of contract. The Assessing Officer has observed that the contract notes are not mentioning the nature of delivery. The Assessing Officer further observed that the appellant has not made full payment at the end of purchase of shares or on the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and appeal stage, the name of the parties from whom shares were purchased or subsequently sold were not given and as such the actual delivery of shares is not proved. The Assessing Officer was, therefore, fully justified in treating the transactions as ingenuine and alternatively speculative in nature keeping in view the decision of the Hon'ble Supreme Court in the case of M/s. Davenport Co. 100 ITR 715 and M/s. Jute Investment Company 121 ITR 56 (SC)". 4. The Id. Counsel of the appellant pleaded that they have established beyond doubt that the transaction is genuine one because the brokers who have purchased shares on our behalf have not denied the fact that the transaction was made by these brokers for and on behalf of the appellant. The Id. Counsel has pleaded that the loss incurred has been duly paid by the assessee to M/s. B. B. Company and M/s. Deepti Chawla Company. The Id. Counsel has pleaded that the delivery of shares is mentioned in Form No. 125965 which is duly signed by M/s. B. B. Company. The Id. Counsel relied on the decision of Commissioner of Income-tax vs Nirmal Trading Co. [1971] 82 ITR 782 (Cal). 5. The Id. DR Relied on the orders passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence for this purpose will be the share transfer application form duly signed by the appellant and submitted to the Company for transfer of the shares in the name of the appellant. The legislature has given clear and unambiguous intention that the transaction has to be settled periodically or ultimately that means the transaction will be settled only when the name of the purchaser of the shares is entered in the shareholders register of the respective company. The legislature has also mentioned that there has to be actual delivery of the shares and also there has to be transfer of scrips. The case of the appellant fails on account of effecting the actual delivery as well as transfers of the scrips. 10. The Hon'ble Supreme Court has given the interpretation of 'speculative transaction' while deciding the issue in the case of Jute Investment Co. Ltd. vs Commissioner of Income-tax [1980] 121 ITR 56 / [1979] 2 Taxman 421. The Hon'ble Supreme Court has given valuable guidance which is reproduced as follows :- "In this appeal, it is contended on behalf of the assessee that the High Court erred in holding that in order to take a transaction out of the definition of 'speculative tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucca delivery orders." The Hon'ble Supreme Court has given their opinion about Tucca delivery orders'. The Hon'ble Supreme Court has held that the transaction means a real order, actual delivery or transfer of commodity and does not relate to notional delivery, constructive delivery or notional transfers and delegated transfers. The Hon'ble Supreme Court has already dealt this issue while deciding the case of Davenport Co. (P.) Ltd. (supra). The Hon'ble Supreme Court has given guidance which is reproduced as follows :- "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 sustains a loss under any of these heads in any year, he shall be entitled to have the loss set off against his income, profits or gains under any other head in that year. This general provision is qualified by the first proviso which permits the set off against his income, profits or gains under any other head in that year. This general provision is qualified by the first proviso which permits the set off of a loss in speculative business only. Explanation 1 says that where the speculative transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." The Hon'ble Supreme Court has held that delivery has to be actual and effective. The Hon'ble Supreme Court has held that it is not sufficient to bring on record that a constructive or symbolic delivery has taken place. 11. We are, therefore, of the opinion that an appropriate indication of word 'actual' has to be given with proper legal meaning to word 'actual'. The 'Black's Law Dictionary' defines 'actual' as follows : "Real; substantial; existing presently in fact; having valid objective existence as opposed to that which is merely theoretical or possible. Oppose to potential, possible, virtual, theoretical, hypothetical or nominal. Something real, in opposition to constructive or speculative, something existing in act. It is used as a legal term in contradistinction to virtual or constructive as of possession or occupation. Actually is opposed to seemingly, pretendely or feignedly, as actually engaged in forming means really, truly in act. As to actual Bias, Damages, Frau ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
